Employee dishonesty insurance—also called crime or fidelity coverage—helps protect a business from financial loss caused by dishonest acts of employees. This coverage is commonly used alongside property and commercial liability programs to address exposures that general liability or property policies do not cover.
What is Employee Dishonesty (Crime)?
Employee dishonesty insurance covers losses from fraudulent or dishonest acts by employees, such as theft of money, securities, inventory, or sensitive customer information. It can be written to cover individual employees, positions, or the entire workforce and is often part of broader commercial crime or fidelity products.
Who needs it
Small and mid-size businesses, retailers, contractors, clubs, and associations frequently buy this coverage when they handle cash, receivables, inventory, or have staff with financial duties. Specialized operations such as dealerships or trucking firms may choose tailored programs—see the Truck Dealerships Employee Dishonesty Insurance storefront for sector-specific options—to address industry-specific exposures.
What it typically covers
Typical coverages include theft of money or securities, forgery, computer fraud, and employee theft of property. Some policies also offer third‑party fidelity options to protect clients or vendors. For broader protections against internal and external financial crimes, businesses sometimes combine a fidelity bond with commercial crime policies; see Fidelity Insurance (Employee Dishonesty Coverage) for more detail.
Common exclusions or limitations
Policies commonly exclude losses resulting from bookkeeping errors, inventory shortages discovered only by audit, and dishonest acts that are not proven. Many plans require proof of loss and may limit coverage by employee, position, or incident. For comprehensive crime programs that coordinate multiple coverages and exclusions, review commercial crime options like Protect Your Business from Financial Devastation with Commercial Crime Coverage Insurance.
Factors that influence cost
Underwriting factors include the size of payroll, revenue, cash-handling practices, employee screening procedures, internal controls, and prior loss history. Operational hazards such as remote operations, high-cash volume locations, or limited segregation of duties can raise premiums. Insurers also consider deductible levels, coverage limits, and whether the policy includes endorsements for computer fraud or funds transfer fraud.
Proof of insurance & compliance
Some clients or contracting partners may require proof of fidelity or crime coverage as part of contractual obligations. Insurers typically provide a certificate of insurance that lists policy limits and effective dates; when bonding is needed, a separate fidelity or dishonesty bond may be issued. Keep internal controls and recordkeeping up to date to support claims and compliance.
How to get a quote
To get an accurate quote, gather details about payroll, number of employees with financial duties, internal controls, and recent loss history. Discuss your operations, such as retail storefronts or transportation exposures, and prepare documentation of hiring and audit procedures. If you want to compare options, talk to your agent about limits, endorsements, and combined crime/fidelity packages.
Frequently Asked Questions
Does employee dishonesty coverage protect against all theft?
No. Policies typically cover theft by employees but exclude simple shortages, bookkeeping errors, and dishonest acts that lack documented proof. Coverage details depend on the policy form and endorsements.
Can I get coverage for contractors or third parties?
Yes. Some policies offer third‑party fidelity or dishonesty bonds to cover vendors, contractors, or agents, but this is often a separate endorsement or bond.
What kinds of businesses benefit most from this coverage?
Businesses that handle cash, securities, inventory, or sensitive financial data—such as retailers, clubs, associations, and service providers—commonly buy employee dishonesty insurance as part of a risk management program.
Still have questions? Talk to a local insurance expert.