Does Insurance Cover Embezzlement Cases?

Types of Embezzlement Insurance

Insurance agencies use a handful of terms to describe the type of coverage that covers corporate embezzlement. This type of policy is commonly referred to as "employee dishonesty insurance," "crime coverage" or "fidelity bonds." Crime coverage and employee dishonesty insurance -- essentially the same thing -- cover the risk of theft from the company and clients who fall victim to theft at the hands of your employees. Fidelity bonds provide the same type of coverage, but extend beyond employees to include thefts committed by third parties. Many businesses add fidelity bonds as a rider to their existing business insurance policies. However, crime and employee dishonesty insurance plans are also obtainable as standalone policies.

The type of business you're running, the amount of cash and value of property handled by your employees will determine the amount of theft insurance you'll need; and how much you pay for it. When you've established the amount of funds that are at regular risk of embezzlement, this sum is the amount of your bond coverage. For instance, if you own a currency exchange where employees typically have access to $750,000 in cash, checks and money orders, you'll require $750,000 in coverage and will pay a corresponding premium. Premiums vary considerably, depending on the number of employees included in the policy, the amount of coverage requested and company history.

Many business insurance policies already include crime insurance as riders on existing policies. Check with your business insurance broker to see if your business insurance includes dishonest employee and crime coverage or a fidelity bond. If it does not, your insurance agent should be able to attach such a binder with a corresponding premium. Another option, is to contact your department of state or local city council to locate a government endorsed fidelity bonding agency. In some regions, local governments provide such programs to local businesses. Complete all necessary paperwork and applications. This generally includes background checks on your business and employees. You should receive a letter of approval in no more than four weeks and coverage begins as soon as the premium is paid.

Generally, bonding insurance policies that protect against embezzlement are valid for six months. Your policy will cover your employees from their first day of work, providing they have passed criminal background checks. After the six-month period has expired, you must renew the policy for continued commercial fidelity bond insurance.