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May 12, 2011 / Brett Cohrs

Employee Dishonesty: Desperate Times Result in Desperate Folks

One of the most important coverages a nonprofit organization can have is employee dishonesty (also known as  a crime bond or fidelity bond).   It addresses theft of funds or other items by an employee or volunteer (some insurance forms will address contractors by endorsement).

And these days when cash is hard to come by, it’s even more important. 

As it is with a lot of coverages that clients don’t readily understand, it sometimes takes a claim to show you that you need to have it.  Let’s let someone else’s claim be a warning to you.  Recently, Kansas Athletics Inc. was reimbursed $250,000 by its carrier for a multi-million dollar ticket scam.   While $250,000 is a pretty healthy amount for a employee dishonesty claim (the article isn’t very specific on which of the organization’s policy actually paid out), the actual loss was $2,000,000.

Depending on the nature of operations and the stipulations of a policy, I’ve sold policies for up to $1,000,000 in employee dishonesty for around $2,500. Not a bad deal if something went awry and your administrative assistant got the sticky fingers.

As always with insurance, our decisions should be driven less by the likelihood of a claim, and more by the assets–both human and inanimate–that are at stake.  Discuss with your agent what’s available. Find an agent that works in your world and pepper her with questions. And with something like employee dishonesty coverage, hear her out. Don’t assume she’s just padding her commission check.

This stuff is important. Two of the biggest claims in the last 4 years that I’m familiar with would have been better addressed with more substantial employee dishonesty coverage. We’re talking hundreds of thousands of dollars.

Think about it!

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