Employee Dishonesty Insurance

As the economy continues to sputter, we are constantly hearing stories about employees committing desperate acts against their employer and even customers.

Here are some scenarios that we have seen happen to some of our clients in the past year:

• An employee stole inventory from the company and disappeared.
• An employee used the company credit card for personal purchases like a television, gas, clothes, etc.
• An employee skimmed money from the till for over 12 months amounting to a total loss of about $20,000.

The question we often get is on the possibility of purchasing insurance to cover these types of acts. You can certainly purchase coverage for this, but it must be done by adding Employee Dishonesty coverage to a Crime Policy.

Employee dishonesty insurance is coverage for just that: dishonest or criminal acts committed by employees. It covers losses where an employee steals money, securities or even tangible property. Some policies will even cover theft of clients’ belongings.

What is the typical limit? Like always this depends. Some companies are much more cash heavy than others, and the risk is greater for this type of loss. However, the typical limit we will see is anywhere from $50,000 to $100,000 in coverage.

How much does the coverage cost? Depending upon the limit and type of business, premium starts at a couple hundred dollars a year. Premium is almost always based upon the number of employees within the company.

Any policy exclusions?

• Acts committed by an owner, officer, or director within the company.
• Inventory shortages where the sole proof of loss is an inventory computation.
• Any employee that is discovered to have a history of prior dishonest acts either before or after being employed by the insured.

Why Identity Theft Insurance is so Important

According to a report by Internet security firm Kaspersky Lab, in what could be one of the largest bank heists in history, more than 100 banks and ATMs have been rigged so that thieves could steal up to $1 billion in cash.

Hackers from Russia, Ukraine, China and Europe were involved in the organized crime ring that was just recently exposed. The hackers installed spying software on bank computers, studied bank employee workflows so they could learn how to mimic their actions and used their knowledge to transfer money into bank accounts set up in other countries.

While the report did not name specific bank institutions, it stated that financial institutions in at least 30 countries were affected, including the United States.

We all know that identity theft is the act of taking someone’s personal information and using it to impersonate a victim, steal from bank accounts, establish phony insurance policies, open unauthorized credit cards or obtain unauthorized bank loans.

What many people don’t realize, though, is that 7% of all U.S. citizens will be victims of identity theft over the next 12 month resulting in over $50 billion in costs. Identity theft is also a long, arduous process for victims as they try to repair their credit, erase erroneous collection accounts, and restore their lives.

Did you know that many homeowners insurance policies actually offer some form of identity theft as part of the policy? You can find out more about this coverage, its cost, and provisions within the rest of the of article below.

If you would like to see if your policy includes identity theft coverage or would like to receive quotes on this coverage, please feel free to give our office a call.

Identity Theft Insurance

What is it?

Some insurance companies now include coverage for identity theft as part of their homeowners insurance policy. Others sell it as either a stand-alone policy or as an endorsement to a homeowners or renters insurance policy.

What does it cover?

Identity theft insurance provides reimbursement to crime victims for the cost of restoring their identity and repairing credit reports. It generally covers expenses such as phone bills, lost wages, notary and certified mailing costs, and sometimes attorney fees (with the prior consent of the insurer). Some companies also offer restoration or resolution services that will guide you through the process of recovering your identity.

What does it cost?

Some insurance companies will include identity theft coverage for no additional cost. However, most will charge anywhere from $25 to $100 annually for the additional insurance coverage.

Tips for Avoid Identity Theft

  • Keep the amount of personal information in your purse or wallet to the bare minimum. Avoid carrying additional credit cards, your social security card or passport unless absolutely necessary.
  • Always take credit card or ATM receipts. Don’t throw them into public trash containers, leave them on the counter or put them in your shopping bag where they can easily fall out or get stolen.
  • Do not give out personal information. Whether on the phone, through the mail or over the Internet, don’t give out any personal information unless you have initiated the contact or are sure you know who you are dealing with and that they have a secure line.
  • Proceed with caution when shopping online. Use only authenticated websites to conduct business online. Before submitting personal or financial information through a website, confirm the site is secure.
  • Make sure you have firewall, anti-spyware and anti-virus programs installed on your computer. These programs should always be up to date.
  • Monitor your accounts. Don’t rely on your credit card company or bank to alert you of suspicious activity.
  • Order a copy of your credit report from each of the three major credit bureaus. Make sure it’s accurate and includes only those activities you’ve authorized.
  • Shred any documents containing personal information such as credit card numbers, bank statements, charge receipts or credit card applications, before disposing of them.

Does Auto Insurance Cover Stolen Items?

One of the questions we often receive is in regards to how auto insurance policies respond to personal items that are stolen from your car.  We want to spend this post providing some insight into this question.

Please keep in mind that every insurance policy is different and the information below may or may not address how your policy would specifically respond. 

What If My Laptop or Other Personal Items are Stolen from My Car?

Auto insurance does a good job of protecting, repairing, or replacing your vehicle if there is a claim.   It does a very poor job, though, of providing any type of coverage for personal items inside the vehicle.   In fact, most auto policies actually exclude coverage for personal items.

So then where do you get coverage? Your homeowners or renters policy will typically pick up the claim for stolen or damaged personal items located in your vehicle.  Keep in mind, though, the claim will be subject to the policy deductible, which will typically be either $500 or $1,000.

Our best recommendation is to avoid leaving items in your vehicle as best you can.   If you do have to leave items in your car, be sure to keep them out of plain view. Thieves will typically target those items that are easiest for them to get to.

Are My CDs Covered by Insurance if They’re Stolen from My Vehicle?

While CDs are quickly going the way of cassette tapes and being replaced by iPods or other portable electronic devices, this is still a common question we receive.

Unfortunately, the answer is your auto insurance most likely does NOT provide any coverage for CDs if they are stolen from the vehicle.   Some companies, though, will now allow you to purchase an endorsement on your policy that will provide limited coverage for the CDs.

Your best chance of finding coverage for this type of claim is to submit a claim through your homeowners or renters policy.   Many policies will provide $1,000 in coverage for “electronic apparatus, while in or upon a motor vehicle.”  However, before you rest easy thinking you are protected in the event of a claim, many insurance companies have interpreted “electronic apparatus” to not include CDs and will deny the claim.

Due to the ambiguity in regards to coverage for your CDs, we have a couple of suggestions:

  1. Check with your agent to see how your auto and homeowners policies will respond if your CDs are stolen.  It is so much better to know ahead of time how the policy will likely respond rather than waiting for the actual claim.
  2. Ask about the possibility of purchasing a coverage extension through your auto insurance company.
  3. Keep a digital copy stored on your home computer or an external storage device as a backup.