An important kind of business insurance quote that an entrepreneur may not be familiar with is fidelity insurance, also called crime insurance. Fidelity insurance policies protect a business against claims arising from the actions of its employees. Any company with more than one or two employees needs to have fidelity insurance covered in their business insurance quotes.
Many business owners dont realize that losses caused by employee theft or fraud are usually not covered by property and other policies their business insurance company has issued. Without a fidelity insurance policy, a business could have to absorb the cost of such employee actions out of its cash flow.
Businesses that deal in large amounts of cash or rely heavily upon employees could need two kinds of crime insurance, which reimburse customers or the company for employee theft or fraud.
- Employee dishonesty coverage covers claims arising from employee theft or embezzlement, including if an employee defrauds a customer.
- Money and security coverage reimburses the company for employee theft, including cash or checks stolen from the company or property stolen from a customer.
When is Fidelity Insurance Necessary?
Fidelity insurance is needed when a business places cash, checks, or valuables in the hands of employees. Retail stores that handle large amounts of cash, credit card transactions, and checks should definitely have money and security coverage, as should businesses that deal with expensive merchandise such as jewelry or electronics.
Any business that lets an employee handle tasks such as bookkeeping, accounting, accounts payable/receivable, banking, or billing should have employee dishonesty coverage. Enterprises such as real estate agencies, insurance agencies, and property management companies that rely upon contracts or agreements with customers should also have this kind of coverage.
Businesses whose employees enter the homes or workplaces of customers including repair businesses, nursing services, exterminating companies, and cleaning services should also have such coverage.
Fidelity insurance is necessary in such circumstances because a business could be held liable for the actions of its employees, sued or forced to reimburse customers for stolen money or possessions. Traditional insurance policies will not normally cover these claims. You will need to get a business insurance quote specifically written for this type of risk.
Something to keep in mind is that even firms whose employees are bonded may still need fidelity insurance; a business can still be held legally liable for the actions of bonded employees.
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