Do You Need Crime Coverage?

Published On: January 20, 2020By Categories: Business Management, Insurance Corner

It is a way to protect your business against illegal acts in the workplace.

Water Well Journal is rolling out a second new column this month. “Insurance Corner” will be published quarterly and provide tips about the different types of coverages needed for businesses in the groundwater industry. The content is accessed from a leading insurance technology database made possible by a grant from Franklin Electric. Thad Plumley, WWJ Editor

You may feel that your employees would never steal from you or that your business would never be the victim of theft, but the harsh reality is that nearly every business is eventually victimized by fraud or theft.

Today, thieves (and potentially your employees) do not need direct access to cash to steal from you—merchandise, supplies, and securities are all fair game.

The following examples represent common business thefts, specifically by employees:

  • Charging inactive accounts
  • Paying bonuses to those who are not supposed to receive them
  • Increasing amounts on checks and invoices after they have been paid
  • Paying bills to companies that do not exist and then cashing those checks
  • Reducing the amounts of outgoing invoices in the books, then paying the reduced amount in cash and then appropriating the customer’s check
  • Padding payroll and cash expenditures
  • Not crediting cash payments
  • Removing ledger sheets from the business to cover up shortages
  • Invoicing materials below sale price and receiving the undercharge from the customer
  • Issuing checks for goods that were not returned
  • Stealing incoming payments and applying that money to subsequent remittances.

Insurance Solutions to Combat Theft

Here are some policies that can safeguard your business against theft:

  • Employee theft coverage protects your money and your business against theft, both from inside the organization and out.
  • Depositors forgery or alteration coverage protects against losses by forgery or alterations of checks, drafts, promissory notes, orders or directions to pay money that is drawn upon you or is drawn upon your accounts by someone acting as your agent.
    -Also protects against forgery losses inflicted by people other than employees
  • Theft disappearance and destruction coverage protects against loss of money and securities by way of theft, disappearance, or destruction while the property is on your business or banking premises.
    -Protects against losses as a result of attempted or actual robberies while the property was on your premises
    -Protects against loss to other property in a safe or vault from an attempted or actual robbery within your premises
    -Outside of your premises, coverage protects money, securities, and other property in the care of a messenger
    -Covers losses inflicted by those other than employees
  • Robbery and safe burglary coverage protects your business against loss of money or securities on your premises, or while in the custody of a messenger outside of your premises.
  • Computer and funds transfer fraud coverage protects against loss of money, securities, and other property via computer fraud.
    -Covers money that is directly related to the use of a computer to fraudulently cause a transfer of property from your premises or banking premises to someone or some entity outside of your premises
    -Pays for the loss of money through fund transfers communicated to a financial institution
  • Money orders and counterfeit currency coverage protects against losses that are not paid upon presentation or are in the form of counterfeit U.S. and Canadian currency paid in exchange for goods or services.
  • Public employee theft coverage per loss protects your money, securities, and other property when it is stolen by employees. The maximum recovery for a single loss is outlined in your insurance policy, regardless of how many employees were involved in the theft.
  • Public employee theft coverage per employee protects your money, securities, and other property when it is stolen by employees. The maximum recovery for single or multiple losses is outlined in your insurance policy, and applies to each employee involved.

Other Safeguards Against Theft

In addition to purchasing insurance protection against theft, consider implementing these safeguards in your business:

  • Secure raw materials, semi-finished goods, and finished goods in walled, fenced, or locked areas on your premises.
  • Limit and control your employees’ access to storage areas and consider implementing a key management program.
  • Inspect merchandise and goods thoroughly when they are received as shipments.
  • Ensure there is more than one employee inspecting outgoing and incoming shipments.
  • Conduct periodic inventory counts, and compare that information to your records.
  • Establish a line of authority at your organization, and ensure that everyone is acting responsibly.
  • Separate your accounting and operating functions.
  • Create a paper trail for each transaction.
  • Screen new employees to weed out applicants who are potential liabilities.
  • Continually train employees concerning how to detect theft and encourage honest behavior at your organization.
  • Make sure the enforcement of rules is consistent and constant.
  • Do not tolerate employee theft on your premises and consider prosecuting offenders.
  • Require mandatory vacations for personnel handling payments.

Theft can be a sensitive issue, but it is imperative that you take the necessary measures to protect your business and your  assets.

Want to Learn More?

Contact NGWA today to learn more about all of our coverage and theft protection solutions. However, these policies can be complex, and it’s important to work with an insurance broker closely when seeking coverage.

Let your NGWA membership work for you! Contact one of the NGWA insurance partners to help you analyze your needs and decide on the right coverage for you and your business. Click here for more information.

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