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What is employee dishonesty coverage?

Employee dishonesty coverage is a crucial component included in a commercial crime insurance policy. It compensates business owners for employee actions that may cause physical or financial harm to the business. Some activities it may protect against include financial forgeries, cybercrimes, loss of business property, embezzlement, and unauthorized money transfers.

The plan is generally offered to small businesses and may feature per-position, per-person, and per-incident limits. Workers covered include temporary employees, seasonal laborers, contractors, volunteers, board members and trustees. You may come across employee dishonesty coverage under the following names:

  • Employee theft insurance
  • Crime fidelity insurance
  • Fidelity bond
  • ERISA fidelity


Learn more about employee dishonesty coverage

When do I need to be aware of employee dishonesty coverage?

All business owners need to learn about employee dishonesty coverage. No matter how honest your employees are, it only takes one bad apple to bury your company and its reputation. While an insurance policy may not safeguard your brand, it may provide the financial means to recover. Companies in retail, health care, and finance may need this coverage more than others.

What is important to know about employee dishonesty coverage?

Employee dishonesty coverage is not as straightforward as other insurance policy components. There are some clauses you should be mindful of:

  • If you make a claim against the actions of an employee and keep that person in the company, another claim to the insurance company for the actions of that person may be denied.
  • Employee dishonesty coverage may not offer compensation for several types of harmful incidents, such as data breaches, accounting errors, government seizures, legal fees, and vandalism.
  • You may add errors and omissions coverage to your insurance policy to cover honest mistakes, bad advice, or negligence.
  • Insurance companies write policies based on either when the loss was discovered or when the loss was sustained.
  • Policy coverage limits can be as high as $1 million or as low as $100,000.