June 24, 2014 Articles

Insurance 101: Employers Required to Establish Employee Theft for Coverage under Crime Policies

Because first-party property policies typically do not cover crime-related losses, companies are purchasing commercial crime policies, also called fidelity insurance, to fill this gap and protect their assets

by Gabrielle T. Kelly

Although no business wants to deal with the issue, companies increasingly are being forced to deal with losses from theft, fraud and embezzlement in the workplace. The losses in these situations can be enormous. Since first-party property policies typically do not cover crime-related losses, companies are purchasing commercial crime policies, also called fidelity insurance, to fill this gap and protect their assets. Commercial crime policies provide employers with protection from losses that arise from employee dishonesty, forgery, and counterfeiting. While the language in crime policies varies by insurer, two examples of typical coverage grants are as follows:

We will pay you for your direct loss of, or your direct loss from damage to, Money, Securities and Other Property directly caused by Theft or Forgery committed by an Employee, whether identified or not, acting alone or in collusion with other persons.

Rhode Island Resource Recovery Corp. v. Travelers Cas. & Sur. Co. of Am., 2011 U.S. Dist. LEXIS 58007, at *3 n.1 (D.R.I. May 25, 2011).

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