Crime Insurance – Why the threat is real

I have a client who told me a story about a person who he used to trust with his business’s petty cash – she was as close as family, but after a while he noticed that funds were missing. Turns out, she was pocketing little bits of cash while making deposits etc. This is not an isolated event, people skim off the top often (read the news lately?) and it begs the question, “How as a business owner, do I protect myself from this?” 

I found a small caption in the Metro Newspaper Tuesday Feb 10 that read:

A Brampton bookkeeper has been arrested on fraud and theft charges after more that $3 million went missing from a large construction firm over the course of six years. Police say between Jan 2002 and May 2008, company cheques were deposited into an outside bank account…”

Three million dollars – is that something your company can afford? There is coverage for this – it is called Crime Coverage, and many insurance policies include a small amount of it – $5000 to $25,000. It will cover you for fraud in various forms but the limit seems rather puny compared to the potential for loss.

When managing your risk for Crime losses, you can do the following:

  • mandate that all deposits be signed by 2 people
  • screen people for criminal backgrounds
  • Determine how much money you can afford to lose before you put in a claim
  • take out a crime insurance policy for any amount over that limit you can absorb.
If an employee skims $100 a week for 5 years, that is $26,000 of your money. Fraud is theft, and theft will hurt you especially as you are trying to navigate the recession of 2009. Take the steps to ensure adequate limits of Crime coverage because it protects you from letting money walk out the door.
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