Employee dishonesty insurance, sometimes referred to as crime coverage, is one type of insurance that may be as essential for protecting your self-storage business as fire or liability insurance. Dishonesty losses in the United States are known to be in the billions of dollars each year, and employee theft stands as one of the most under-reported crimes affecting businesses. In fact, more money and property are stolen annually by trusted employees than by all of organized crime.
One compelling reason for securing crime insurance is that employee dishonesty losses are excluded from coverage under virtually all commercial property policies. Fortunately, employee dishonesty coverage is available from many specialty insurers at very reasonable rates. When you compare the potential losses you may suffer from employee theft with the very affordable cost for this coverage, crime insurance becomes a prudent investment for concerned self-storage facility owners.
Unfortunately, dishonesty insurance is often overlooked by many self-storage facility owners who prefer not to be suspicious of the people working for them. The fact of the matter is that your most trusted employees are in the best position to use their knowledge of your business operations to steal or embezzle from you.
What can you do to protect yourself from employee dishonesty? The best available defense includes implementing strict operating controls in combination with careful employee supervision--and securing adequate insurance protection. The focus of this article is to provide a brief overview of commercial crime exposures facing self-storage facility owners and the coverages available to protect yourself against them.
Crime coverages can be tailored to fit the size and scope of your self-storage operations and can protect you against such losses as robbery, burglary, theft, embezzlement and more. In most cases, your business-property and liability package policy can be endorsed to provide coverage against employee dishonesty, the loss of money and securities from your premises, and the loss of other covered business property such as computers or office furniture. Keep in mind that covered items may also include the property of others for which the insured is liable, so you will be covered in the event that an employee was to steal from one of your customers.
Employee dishonesty insurance can be written in two ways: as a blanket-coverage policy or as a scheduled-coverage policy. With blanket coverage, the limit of insurance applies to each loss, no matter how many employees caused the loss and whether or not any were caught and identified. With scheduled coverage, the limit of insurance applies per employee, who must be specifically identified (either by name or title) in the policy declarations and who must be identified as the person(s) causing the loss.
Although scheduled coverage might appear to be more desirable than blanket coverage, that is not always the case. Scheduled coverage is usually much more expensive than blanket coverage for any given number of employees, and the per-employee limit of a scheduled coverage form applies only to those employees that can be precisely identified as the perpetrator(s) of a dishonest act.
One very important point concerning employee dishonesty claims is that "dishonest acts" must be committed with "manifest intent." In other words, a loss resulting from an unethical act, such as lying, must be due to the employee seeking personal gain. Without manifest intent such claims would be disallowed. Also, inventory shortage claims are excluded from employee dishonesty policies, because losses can occur from a variety of reasons besides theft, such as accounting errors.
Money and security claims, and business-personal claims are not the only losses that can be covered under employee dishonesty. Riders are available to protect you against check forgery, credit card misuse and computer fraud/theft of information to supplement your existing protection at extra cost.
In addition to implementing security controls and procedures, several commonsense measures can help minimize your risk of theft. Checks should be immediately stamped "for deposit only," for example, and invoices should always be stamped "paid" to circumvent the chances of paying the same invoice twice. Fidelity bonds are also available that can give you added protection. However, for true peace of mind, it's probably best to expand the value of your insurance by purchasing dishonesty insurance. Consult your insurance agent for complete details. *
David Wilhite is marketing director of Universal Insurance
Facilities Ltd. Universal offers a complete package of coverages
specifically designed for the self-storage industry, including
loss of income, employee dishonesty, comprehensive business
liability, hazardous-contents removal and customer storage. For
more information, contact Universal at Box 5400, Scottsdale, AZ
85261-9957; phone (800) 844-2101; fax (602) 970-6240;