Theft in general is a common issue that all businesses face. Most business owners typically think of customer theft as the biggest issue, but the reverse is actually true. The majority of thefts in businesses occur from employees, often in the form of stolen merchandise, lost funds, identity theft and other types of misdeeds. A Chamber of Commerce report has found that 75% of all employees steal something at least once. Although this is a problem across the board, it tends to be more prevalent in certain industries such as banking, finance and government.

Generally, most business insurance policies do not offer coverage for employee theft. For most small businesses, coverage for theft and employee misbehavior can be obtained by requesting it to be on the policies and consequently paying a higher rate. On average, business insurance policies may cover up to $25,000 for employee theft, depending on the policy as well as other specific information. However, that is a relatively small amount of money compared to the potential cost of employee theft and misbehavior. A lot of people think of employee theft as just a couple of employees that decided to steal some merchandise or office supplies, but it can be much worse than that. For example, an employee could have been embezzling tens of thousands of dollars over the years or they may have caused an information breach and sent out confidential customer information. When these types of things happen, they can be extremely damaging financially and cause the business significant damage in terms of its reputation as well.  

Given the potentially costly and damaging nature of employee theft for some organizations, there is actually a special type of crime insurance for these purposes. While a small business or retail store may be comfortable with a coverage limit of up to $25,000, that is usually not sufficient for major banking, finance and government institutions. Crime insurance is offered separately and covers theft of property, merchandise, securities and money. If and when an incident occurs, the company must contact its insurance company and start an investigation. The company will have the option of how to proceed with the investigation and it may consult with its legal team to come up with a remedy. Consequently, the employee may be terminated or placed on probation, depending on the circumstances. After the incident has been sufficiently investigated and documented, the business will likely have to submit a proof of loss statement to its insurance company to verify the circumstances and amount of losses that it suffered as a result of the incident.

Unfortunately, employee theft is a common reality that all businesses face in one way or another. While most small businesses may not be under a significant threat for employee theft, it can be a safe bet to receive a minimal amount of coverage for it. Larger companies that work with a lot of confidential information or large funds are advised to receive crime insurance to protect them from significant losses if something happens. Call us at 512-989-6006 for more information about Round Rock business insurance.

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