Crime Insurance
Employee Loyalty & Fidelity Insurance
Employee Loyalty & Fidelity Insurance is a specialized policy that protects businesses from financial losses due to fraudulent activities, dishonesty, or misconduct by employees. It covers losses arising from embezzlement, forgery, theft, misappropriation of funds, and fraudulent financial transactions conducted by employees.
Why Employee Loyalty & Fidelity Insurance is Essential?
- Protection Against Employee Dishonesty
- Safeguards Company Finances & Reputation
- Reduces Business Risk
- Enhances Trust & Accountability
- Ensures Business Continuity
Important Things You Should Note
- Covers Only Employee-Related Fraud – Losses caused by external parties or cyber fraud are not included.
- Claims Require Proof of Fraud – Businesses must provide evidence (audit reports, financial records, etc.) to process claims.
- Comprehensive Risk Assessment is Recommended – Insurers may require background checks and internal controls to issue the policy.
- Coverage Can Be Extended to Different Fraud Types – Includes cash theft, asset misappropriation, and forgery depending on policy terms.
- Regular Audits & Security Measures Lower Premiums
- Strong internal controls and audits reduce risk and insurance costs.
What is Covered & What is Not Covered?
What is Covered?
- Theft & Embezzlement – Loss of cash, securities, or inventory stolen by employees.
- Forgery & Document Fraud – Fraudulent transactions, forged checks, or misused company funds.
- Misappropriation of Funds – Unauthorized transfers, financial fraud, and fund diversion.
- Data & Intellectual Property Theft – Stolen company trade secrets, customer data, and confidential records.
- Employee Collusion in Fraud – Losses caused by multiple employees working together to commit fraud.
What is Not Covered? (Exclusions)
- Losses Due to Poor Management – Lack of internal controls leading to financial mismanagement.
- Fraud Committed by Business Owners & Partners – Only applies to employees, not owners or directors.
- Cyber Fraud & Hacking – Requires a separate Cyber Insurance Policy.
- Losses Discovered After Policy Expiry – Claims must be filed within the policy period.
- Third-Party Fraud – Fraud by vendors, suppliers, or customers is not covered.
Frequently Asked Questions (FAQs)
Who needs Employee Loyalty & Fidelity Insurance?
Businesses handling cash transactions, sensitive financial data, or valuable assets.
Ideal for banks, retail chains, manufacturing units, and service-based companies.
How can I prove an employee’s fraudulent activity?
Businesses need to provide audit reports, financial statements, transaction records, or police reports.
Does this policy cover all employees?
Yes, but coverage can be customized for specific job roles handling financial transactions.
How can businesses reduce fraud risks?
Implement background checks, strong internal audits, dual-authorization processes, and financial monitoring.
Can a business recover full losses through this insurance?
The claim payout depends on the policy limit, deductible, and terms agreed upon with the insurer.
