Employee Dishonesty

What Does Employee Dishonesty Mean?

Employee dishonesty refers to any fraudulent act committed by an employee or a group of employees that could potentially lead to financial losses for a company. To safeguard its interests, a company may purchase a commercial crime policy or standalone employee dishonesty insurance. Smaller companies often add this coverage as an endorsement to their business owner’s policy rather than buying it on its own.

Employee dishonesty is also known as commercial dishonesty.

Insuranceopedia Explains Employee Dishonesty

According to the Association of Certified Fraud Examiners, approximately 6 percent of total revenues for companies, equating to about $400 billion per year, are lost due to fraud and embezzlement. Common cases of employee dishonesty include theft, computer or fund transfer fraud, embezzlement, robbery, burglary, and forgery involving money, property, or securities. Consequently, insurance policies are available to help companies mitigate the costs of such losses, which can be substantial and even crippling for small businesses. Most owners pair this coverage with internal controls like dual sign-off on payments and regular audits, since there are practical steps a company can take to prevent employee theft and fraud in the first place.