Employee Dishonesty Insurance: You Need It

No employer likes the idea that their employees—the ones they interviewed, offered a job, hired, and see every day, would steal from them. But the unpleasant truth is that employee theft is surprisingly common. A recent report indicates that some 60 billion dollars’ worth is stolen from U.S. retailers annually. Companies of all sectors, on average, lose 7% of their revenue to theft or fraud each year. Ironically, one of the main reasons employees are able to steal is because of the trust built over time. It’s actually easier to steal from a company that you work for than to steal from an establishment you have no association with. Unfortunately, if an employee steals once, it becomes more and more likely they will repeat the action. These, among other factors, have made employee dishonesty insurance a must have.

Employee Theft at Golf Courses?

While retailers are the most common businesses to get robbed, golf courses are not exempt from employee dishonesty. Employee theft comes in many different ways. Recently, an employee stole equipment from a golf course in Mechanicsville, PA, to scrap it for some quick cash. On a much larger scale, this past year, the former general manager of a course in Illinois is facing over 20 felony counts in regard to totals over $100,000 in fraud and embezzlement during the last decade. In 2014, a 62 year old golf course bookkeeper in Burlington, VT., stole tens of thousands of dollars by issuing herself checks without authorization. Whether large or small, employee dishonesty is major issue facing golf courses.

Employee Dishonesty Insurance

Some coverage is available from standard property insurance policies for criminal acts. However, many times these policies do not cover losses associated with employee theft. For this reason, crime insurance has been developed. Crime insurance is focused on covering the limitations of other policies, including limitations regarding the fraudulent actions of employees. Some of the main areas a crime policy covers are:

• Employee Theft
• Forgery or Alteration
• Computer Fraud
• Funds Transfer Fraud
• Money Orders and Counterfeit money

How Employee Dishonesty Insurance Works

The employee dishonest policy will typically be written with a per loss limit, a per employee limit, or a per position limit. The coverage limit for a grounds worker like likely be less than the coverage limit for, say a CFO. Exactly “who” is covered will be defined in the policy. However, it should include current or former stakeholders, such as employees, partners, members, directors and officers, volunteers, trustees, seasonal and temporary employees under your control.

Loss Sustained vs. Discovery

Some policies are written using the loss sustained form, which means losses occurring during the timeframe of the policy which are also discovered during the period (or within a year of expiration) will be covered. However, many policies are written in terms of “discovery” cover losses when they are discovered. This means the loss could have happened at any time, but if it is initially discovered during the active policy period it will be covered.

Usually we are friends with the people we work with, which makes it harder to believe they would steal. Unfortunately, it happens. It’s imperative that you protect yourself and your company. If you have any questions about your crime insurance or other country club coverages you should carry, please contact the H&K Insurance Agency. We’ll help get your country club fully insured and help you reduce potential risks to your business.

Brian began working at H&K Insurance Agency in 1992. He is a Certified Insurance Counselor (CIC), and an exceptionally qualified insurance professional helping clients protect their assets, and create future financial security in all areas of insurance. Brian is a sponsor of The New England Club Managers Association and specializes in helping golf clubs manage risk by creating insurance plans to protect clubs and their members. Brian oversees H&K’s regular donations to charitable organizations at both local and national levels, and runs seminars for local communities on how to protect their assets with insurance contracts.