Crime Insurance is a Necessity
Mary Thompson, Capstone President, August 24, 2015
Last month I wrote in great depth about employee theft and dishonesty. Small business’s have a greater risk of employee dishonesty. A small business often has one person in charge of the books and they may handle accounts payable, account receivable as well as monthly reconciliation and the balance sheet. Having one person handle all aspects of accounting puts a business in a VERY vulnerable position. There isn’t someone there really checking that all entries are accurate and watching the money so to speak. This leaves a lot of room for employee dishonesty.
There are some basic controls that can be put in place to help eliminate such losses. The easiest may be an annual outside audit, to help lower the risk of fraud. Small business owners often feel close to their employees and put a lot of trust in them leaving little room for acknowledging dishonesty.
Often time’s small businesses don’t take out a crime policy or have structures in place to cross check employees. Typically due to having fewer employees, the owners have more trust due to the more intimate setting of a small business. Employers should consider other safeguards as well as outside audit such as having background checks completed on employees, separate accounts payable and accounts receivable if possible, and conduct surprise audits. Even if all these safeguards are in place it is still important to have some form of crime insurance.
Crime Insurance, what is it for?
Crime insurance will protect a business against robbery, burglary, and both outside(? Do you mean like if someone who is not an employee robs the business? If so, I think you already covered that in the two words prior, so I would leave this out…if it’s a separate type of crime, then please leave it! I just wasn’t sure lol) and employee theft. Exposures vary for each business so custom crime policies are often used to cover losses that are not covered by other insurance policies.
Crime Insurance, what will it cover?
A Crime policy will usually cover money, property and securities due to some form of criminal act. There is coverage for crime that happens inside a premise as well as outside. A crime policy (removed comma) can cover credit card fraud, counterfeit money, forgery, employee theft, and even computer fraud.
3 Major reasons every business should have a crime policy
1. To help protect the company’s assets.
2. To protect the integrity of your company. Not only is it embarrassing to have to call a client to inform them that there has been some form of crime that affects them but also your clients will think differently of your company as a whole when they see you haven’t protected them.
3. Don’t want to learn the hard way that not all employees can be trusted. Economic pressures can cause an employee to become dishonest.
Technology has made employers at a greater risk of crimeIt is easier now then ever to commit theft without actually even entering a building. Cyber insurance helps protect businesses against some form of cyber crime but typically not when it involves theft of cash. It is important to understand the way different types of policies cover your business. Having a knowledgeable broker on your side can really help a small business navigate their insurance needs.
