Most self-storage owners would like to think their staff is loyal, trustworthy, honest and dedicated to their business. Unfortunately, temptation, greed, and social and financial pressure can drive some employees to treachery. Even the most efficient storage facility can fall victim to employee theft.
Larceny can be committed by one employee or several. Forging and hiding receipts, pocketing loose change and stealing merchandise from the office are common practices. There have been reports of managers creating bogus payrolls, over-billing expenses and committing purchase fraud. Some employees even go so far as breaking into storage units and stealing tenants’ goods, later calling police to report a break-in.
The U.S. Chamber of Commerce reports that billions of dollars are lost every year to employee theft. Stealing is a severe threat to any business, and it only takes one or two people to cause financial chaos. Self-storage owners should recognize the risks, deter dishonest employees from working at their facilities, and understand the benefits of the appropriate insurance.
Protect Your Business
So what can you do to protect yourself from employee dishonesty? In-house theft can be hard to detect, especially if the criminal is good at what he does. There are several ways to keep a closer eye on your facility and minimize risk. Start by watching out for unusual occurrences, such as discrepancies in cash amounts and missing supplies and merchandise. Take notice of employees’ behavior. Watch for unusual working hours, poor work performance, constant complaining and defensive behavior.
Implementing an antitheft regime in your facility can also reduce your risk. Employees will be less likely to steal from you if they think there is good chance of being caught. Perform regular surprise visits and audits to keep track of merchandise and receipts. When employees take time off, use their replacements to double-check payroll and accounting.
Organize an awareness program to educate workers about crime and keep them on the lookout for theft. Set up surveillance in key places such as the management office and primary storage areas. Not only will this create a historical record of events, it can deter theft from outside the facility as well. Avoid retaining tenant keys to eliminate access to customers’ goods. Most insurance companies won’t write policies for storage facilities that keep keys because of the increased risk it entails.
Finally, know who you are hiring. Some people have theft in mind from the start, and you can avoid hiring these candidates by conducting thorough background checks and obtaining previous job references.
In addition to deterring crime, secure an adequate amount of employee-dishonesty insurance. Losses due to employee duplicity are excluded under most commercial policies, and many owners don’t realize the importance of this coverage. It can protect against damages from theft, embezzlement and other related risks, and can be tailored to fit the size and scope of your operation. In most cases, your business-property and liability insurance package can be endorsed to provide coverage against employee dishonesty, loss of money and securities from your premises, and loss of other covered business property such as computers.
One important point to remember about an employee-dishonesty claim is the act must have been committed with “manifest intent.” In other words, the loss must be the result of an unethical act such as lying, through which the employee sought personal gain. Without manifest intent, these kinds of claims are generally 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. Consider also that money and security claims and business-personal claims are not the only losses that can be covered under employee dishonesty. Endorsements might be available to protect you against check forgery, credit-card misuse and computer fraud to supplement your existing protection at extra cost.
This article is a guideline to aid in minimizing risk in self-storage facilities. The information it contains is intended to be of general interest and does not address the circumstances of any particular individual or entity. Nothing in this document constitutes legal advice, nor does any information constitute a comprehensive or complete statement of the issues discussed or the laws relating thereto.
Amy Brown is part of Universal Insurance Facilities Ltd., which offers a comprehensive package of coverages specifically designed to meet the needs of the self-storage industry. For more information, or to get a quick, no-obligation quote, call 800.844.2101; visit www.universalinsuranceltd.com.