Employee Dishonesty Coverage

Employee dishonesty coverage, also known as employee theft coverage, provides businesses with a safeguard against financial harm resulting from deceitful or fraudulent behavior by their staff. This type of protection typically covers instances of theft involving money, securities, or valuable resources, along with acts like embezzlement, forgery, or any form of deceitful conduct carried out by an employee for personal benefit.

Employee Dishonesty Coverage

The significance of employee dishonesty coverage transcends business size, offering a vital safety measure should an employee’s unethical conduct lead to financial repercussions. This coverage plays a crucial role in maintaining the stability and security of a company, ensuring resilience in the face of dishonest actions by employees.

What Does it Cover?

Employee dishonesty Coverage typically encompasses a range of deceitful or fraudulent behaviors carried out by employees that lead to financial harm for the insured business. This insurance commonly includes protection for:

Theft of money

This involves the unauthorized taking of physical currency, checks, or electronic funds from the employer’s premises or accounts.

Unauthorized Use of Property

In addition, employee Integrity Coverage can safeguard against theft or improper utilization of the employer’s property, equipment, or assets.

Securities fraud and forgeries

It extends to losses arising from the deceptive sale, transfer, or falsification of the insured business’s securities, stocks, or bonds.


In cases where an employee diverts company funds for personal gain, the coverage can provide financial protection.


Coverage often includes losses resulting from the falsification of signatures or documents by employees, leading to financial detriment to the business.

Deceptive financial transactions

This insurance can shield against financial losses stemming from deceptive financial transactions initiated by employees, such as unauthorized wire transfers or improper use of company credit cards.

Cyber Fraud

It may also cover losses resulting from cyber fraud or computer-related crimes committed by employees, such as unauthorized access to sensitive financial information.

Loyalty Bonds

Certain businesses may mandate that employees with access to company finances or assets be covered by loyalty bonds, a form of employee integrity coverage.

What Does it Not Cover?

Exclusions from employee dishonesty Coverage can vary based on the specific policy and insurer, but common exceptions may include:

Personal Dishonesty

Also, acts of dishonesty or fraud committed by employees in their capacity, unrelated to their employment duties, are typically not covered.

Non-Employee Actions

Employee Integrity Coverage generally does not extend to theft or fraud committed by individuals who are not employees of the insured business.

Bodily injuries or property damage

This coverage typically focuses on financial losses and may not address bodily injury or physical property damage resulting from employee dishonesty.

Criminal Offenses

Acts of employee dishonesty involving criminal activities, such as drug trafficking or other illegal actions that do not relate to the job, may not be covered.

Owner or Principal Misconduct

Some policies exclude coverage for dishonest acts committed by the business’s owners, partners, or principals.

Errors or Omissions

Employee Integrity Coverage is intended to address deliberate acts of dishonesty or fraud, so it may not cover losses stemming from employee mistakes or oversights.

Prior Knowledge

If the employer was aware of an employee’s dishonesty or criminal background before hiring or retaining them, subsequent losses related to that employee’s actions may not be covered.

Post-Employment Misconduct

Coverage may not apply to dishonest acts committed by employees after their termination or resignation, as they are no longer considered employees at the time of the incident.

Non-Monetary Losses

Employee Integrity Coverage primarily focuses on financial losses and may not extend to non-financial damages or losses, such as harm to reputation.

How Much Does it Cost?

Meanwhile, the price of employee dishonesty Coverage can be swayed by a multitude of factors specific to each business. These factors essential elements like the size of your workforce, the sector in which you operate within the desired coverage scope, and your company’s past claims history.

Furthermore, the chosen coverage level and deductible will influence the premium. A business with a large workforce and a history of previous incidents may face higher premiums, while smaller businesses with a spotless record might pay less. Collaborating closely with an insurance provider to craft a policy that aligns with your unique needs and budget is crucial. Regardless, the expense of employee dishonesty Coverage is a prudent investment, as it can shield your business from the financial consequences of employee misconduct.

How does Employee Dishonesty Coverage Protect you?

Employee dishonesty Coverage safeguards your business by offering financial protection in the event of dishonest or fraudulent actions committed by an employee, resulting in financial losses. Here’s how it extends its protection:

  • It offers a sense of security, particularly when employees have access to financial assets or sensitive information.
  • Employee dishonesty incidents can disrupt and harm a business’s operations. This coverage enables your business to maintain financial stability and continuity, allowing you to continue serving customers and fulfilling financial obligations even after a fraudulent event.
  • Should legal actions, such as lawsuits or investigations, arise due to the dishonest actions of an employee, employee dishonesty coverage may help cover legal costs and expenses associated with defending your business.
  • Although not a direct coverage aspect, the financial support provided by this insurance can indirectly protect your business’s reputation. It aids in recovery from financial losses, which is vital in preserving your reputation and credibility in the eyes of customers, partners, and stakeholders.

Lastly, in certain cases, employee dishonesty coverage may be a mandatory requirement for specific industries or regulatory compliance. For instance, businesses involved in financial services or handling client funds may need fidelity bonds to meet legal requirements.

Examples of Employee Dishonesty Claims

Employee dishonesty claims refer to situations where employees engage in dishonest or fraudulent activities that result in financial losses for their employers. These instances can lead to legal actions, investigations, and insurance claims. Here are a few examples of employee dishonesty claims:

  • Embezzlement: Employees with access to company funds or financial records manipulate financial records to siphon off company funds into their accounts. For instance, a financial officer might alter records to misappropriate funds.
  • Inventory theft: A warehouse or inventory management employee may misappropriate products or materials from the company and sell them for personal profit.
  • Data Misuse: Employees with access to sensitive company data may misuse this information. They could exploit proprietary information by selling it to competitors or using it for personal gain.
  • Procurement Corruption: Employees responsible for procurement or vendor relationships may receive bribes from suppliers in exchange for awarding contracts to specific vendors at inflated prices.


  • Credit Card Misuse: Employees with access to company credit cards may misuse them for personal expenses, such as travel or shopping.
  • Theft of Company Assets: Employees may steal physical assets, such as laptops, office supplies, or equipment, and sell or use them for personal purposes.
  • Payroll Irregularities: Employees responsible for payroll processing may create fictitious employees or manipulate payroll records to divert funds into their accounts.

To mitigate the risks and potential financial losses associated with employee integrity breaches, it is essential to implement robust internal controls, regular audits, and employee training programs. Additionally, investing in employee integrity coverage can provide a financial safety net, helping businesses recover from the financial consequences of employee misconduct and maintain their reputation and credibility in the eyes of customers, partners, and stakeholders.