An office manager in charge of a company’s books embezzles funds to the tune of hundreds of thousands of dollars. An employee of a brokerage house obtains client funds on the promise of a conservative investment strategy, but instead, loses the funds in risky and reckless investments. The head of security for a marketing company uses secret client information in an elaborate kickback scheme and ultimately goes to jail. An employee sells trade secrets of his employer to a competitor. Each of these is a real claim submitted by a company under its employee dishonesty insurance policy.
Employee dishonesty is a real and nasty risk inherent in all businesses. It’s a nightmare from which no small business can easily recover. One corruption-busting antidote has long been thought to be employee dishonesty insurance. This way, employers would have some recourse in the event a rogue employee fleeced them and fled. That no longer may be the case, as evidenced by the examples above — in each of those cases, not only did the insurance company find a way to deny coverage, a court upheld the decision.
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