Employee Dishonesty

By David Wilhite

Are you aware of the benefits of employee-dishonesty insurance? Manyself-storage facility owners are not aware of the benefits of this coverage,which can be as important as fire or liability insurance when it comes toprotecting your operation. If you have one or more employees, please take a fewmoments to learn how this useful and affordable coverage can help safeguard yourbusiness.

Employee theft ranks as one of the most under-reported crimes in the UnitedStates. Estimates vary, but it can safely be said more than $2 billion worth ofmoney and property are stolen by trusted employees each year. And unlikeburglary and robbery, losses due to employee dishonesty are excluded undervirtually all commercial-property policies. In other words, without specificcoverage, you are at risk.

Unfortunately, employee-dishonesty insurance is often overlooked by facilityowners who choose not to be suspicious of the people working for them. This isan unfortunate situation, as your most trusted employees are in the bestposition to use their knowledge of your business operations to steal or embezzlefrom you.

So what can you do to protect yourself from employee dishonesty? In additionto securing adequate insurance protection, the best available defense includesimplementing strict operating controls in combination with careful employeesupervision. Some of these measures are listed below. But first, let's take abrief look at some of the commercial crime exposures facing self-storagefacility owners and the coverages available to protect yourself 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 ofyour self-storage operation. In most cases, your business property andliability-package policy can be endorsed to provide coverage against employeedishonesty as well as the loss of money and securities from your premises, andthe loss of other covered business property, such as computers.

One important point to remember about employee-dishonesty claims is that"dishonest acts" must be committed with "manifestintent"--that is, a loss resulting from an unethical act, such as lying,must be due to the employee seeking personal gain. Without manifest intent, suchclaims would be disallowed. Also, inventory-shortage claims are excluded fromemployee-dishonesty policies because losses can occur from a variety of reasonsbesides theft, such as accounting errors. Consider also that money and securityclaims and business-personal claims are not the only losses that can be coveredunder employee dishonesty. Riders are available to protect you against checkforgery, credit-card misuse and computer fraud to supplement your existingprotection at extra cost.

Several commonsense measures can help minimize your risk of theft. Forexample, checks should be immediately stamped "for deposit only" toensure a dishonest employee cannot try to cash it, and invoices should always bestamped "paid" to circumvent the possibility of an unscrupulousemployee submitting the same invoice twice. Implementing security controls andprocedures, such as video-surveillance cameras in your manager's office andother key locations, can also help deter the risk of theft. However, for truepeace of mind, your best bet is to purchase adequate dishonesty-insurancecoverage. Consult with your insurance agent or broker for complete details.

In addition to loss-of-income and extra-expense coverages, UniversalInsurance Facilities Ltd. offers a complete package of coverages specificallydesigned to meet the needs of the self-storage industry. For more information,or to get a quick, no-obligation quote, write P.O. Box 40079, Phoenix, AZ85067-0079; call 800.844.2101; fax 480.970.6240; e-mail [email protected];www.vpico.com/universal.