Protecting Yourself Against Employee Dishonesty

By David Wilhite

Are you aware of the benefits of employee-dishonesty insurance? Many self-storagefacility owners aren't, although this coverage can be as important as fire or liabilityinsurance when it comes to protecting your operation. If you have one or more employees,please take a few moments to learn how this useful and affordable coverage can helpsafeguard your business.

Employee theft ranks as one of the most under-reported crimes in the United Statestoday. Estimates vary, but it can safely be said that more than $2 billion worth of moneyand property are stolen by trusted employees each year. Unlike burglary and robbery,losses due to employee dishonesty are excluded under virtually all commercial-propertypolicies. In other words, without specific coverage, you are at risk. Unfortunately,employee-dishonesty insurance is often overlooked by facility owners who choose not to besuspicious of the people working for them. This is an unfortunate situation, as your mosttrusted employees are in the best position to use their knowledge of your businessoperations to steal or embezzle from you.

What can you do to protect yourself from employee dishonesty? In addition to securingadequate insurance protection, the best available defense includes implementing strictoperating controls in combination with careful employee supervision. Some of thesemeasures are listed below, but let's take a brief look at some of the commercial crimeexposures facing self-storage facility owners and the coverages available to protectyourself against them.

Crime coverages can protect you against losses from robbery, burglary, theft,embezzlement and other risks, and can be tailored to fit the size and scope of yourself-storage operation. In most cases, your business property and liability-package policycan be endorsed to provide coverage against employee dishonesty, as well as the loss ofmoney and securities from your premises, and the loss of other covered business propertysuch as computers.

One important point to remember about employee-dishonesty claims is that"dishonest acts" must be committed with "manifest intent." That is, aloss resulting from an unethical act, such as lying, must be due to the employee seekingpersonal gain. Without manifest intent, such claims would be disallowed. Also,inventory-shortages claims are excluded from employee-dishonesty policies because lossescan occur from a variety of reasons besides theft, such as accounting errors. Consideralso that money and security claims, and business-personal claims are not the only lossesthat can be covered under employee dishonesty. Riders are available to protect you againstcheck forgery, credit-card misuse and computer fraud to supplement your existingprotection at extra cost.

There are several commonsense measures that can help minimize your risk of theft.Checks should be immediately stamped "for deposit only," for example, andinvoices should always be stamped "paid" to circumvent the chances of paying thesame invoice twice. Implementing security controls and procedures, such as installingvideo-surveillance cameras in your manager's office and other key locations, can also helpdeter the risk of theft. However, for true peace of mind, your best bet is to purchaseadequate dishonesty insurance coverage. Consult your insurance agent or broker forcomplete details. No matter how large or small your self-storage facility may be, securingadequate coverage is essential for protecting your business and your peace of mind.

David Wilhite is the marketing manager of Universal Insurance Facilities Inc.Universal offers a complete package of coverages specifically designed to meet the needsof the self-storage industry, including loss of income, employee dishonesty, comprehensivebusiness liability, hazardous-contents removal and customer storage. For more information,contact Universal at Box 40079, Phoenix, AZ 85067-0079; phone (800) 844-2101; fax (602)970-6240; Web: www.vpico.com/universal.