What Happens If an Employee Steals from You? (Will General Liability Insurance Cover You?)

As a business owner, you’ll want to believe that you’ve done everything possible in screening your potential employees before hiring them, but the truth is no one is perfect. Not you. Not your most trusted employees. No one.

Many business owners will not, however, believe this until they are faced with a situation they’ve never anticipated. Imagine walking into your office one morning only to realize that one of your trusted employees has embezzled hundreds if not thousands of dollars. Shocking, right?

But what options do you have?

If you are like most business owners, you’ve already taken steps to get general liability insurance for business. But general liability policies do not usually include employee dishonesty coverage. That’s why some businesses add the theft coverage by endorsement, although we’d suggest that you get a separate policy usually in the form of a bond.

General Liability Insurance cover

What’s Employee Dishonesty Coverage?

Employee theft coverage is a form of insurance designed to protect businesses from thefts done by their employees. It is a type of coverage that covers a variety of theft but is subject to various conditions and exclusion, as you’ll see in this article.

Employee dishonesty coverage is among important policies under a commercial crime policy. Usually, the standard general liability policy does not include losses from employee crimes. Criminal or dishonest acts by your employees, partners owners, and directors which causes losses will not be included in the business general liability coverage.

This is where employee theft coverage comes in.

Employee Theft in the US Today

Don’t get us wrong!

Our goal here is not to discredit the hardworking employees who drive the U.S. economy every day but to shed light on a long term problem that cripples every honest citizen’s impact on improving our country’s economy.

A study done by the Association of Certified Fraud Examiners (ACF) in April 2017 regarding cases of theft in the workplace showed that 75 percent of employees admitted to having stolen from their employers at least once. These eye-opening statistics were supported by the US Chamber of Commerce.

If you are not yet convinced, consider this: reports from the Shulman Center for Compulsive Theft and Spending shows that one-third of all business bankruptcies are due to employee theft.

So, Do You Really Need Employee Theft Coverage?

Unless you want to be among the 30 percent of businesses that go bankrupt due to employee theft, you’ll agree with us that employee theft coverage is essential for any business with employees.

Employee theft can take various forms. However, the most common thievery cases by employees are check fraud and funds theft.

Employees can steal company products and sell them in the underground or black market, embezzle thousands of dollars from your business funds, or overinflate bills from third-party suppliers and get kickbacks from contracted businesses.

Although it is every business owners hope that they’ve hired faithful employees, it is important to protect your business from corrupt employees.

Are Employers Liable for Employer Theft?

Employee theft can lead to more significant problems, including loss of company profits. However, today many dishonest employees are not only stealing cash and assets. They are stealing customer data too with the aim of selling it or committing identity fraud.

Others are accessing customer accounts to steal or misuse their money.

As an employer, you can be sued in case your employee engages in dishonest dealings, and a customer suffers damage. In fact, plaintiffs usually target large companies because individual employees are likely not able to pay for the losses. In such cases, employers might be accused of negligence and held liable.

How Does Employee Dishonesty Insurance Protect Your Business?

Employee dishonesty insurance covers your company for damages and losses sustained by your company’s money, property, or securities from theft committed by an employee.

Insurance companies provide a wide range of products aimed at protecting small and medium-sized companies from employee thefts.

Theft could be committed by one worker, a group of workers, or employees working jointly with individuals from outside your company.

Employee theft policy will cover a number of potential criminal acts committed by your employees.

So, What Do You Do When You Suspect Theft?

In case you suspect that one of your employees is stealing from your company, you should not try to investigate or approach the worker on your own.

Instead, you should call the police, a security firm or private investigators immediately. This will help you to prove your claim when making a report.