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Employee Dishonesty Coverage

I’ve gotten several questions on Employee Dishonesty coverage lately, and I feel that is there is a lack of understanding as to why Employee Dishonesty coverage is needed.

For a business owner, having Employee Dishonesty coverage will pay you back for the loss up to your policy limit if an employee of yours steals, forges a check, or makes illegal electronic funds.  I believe this is what most of us think of when referring to Employee Dishonesty coverage. However, for Community Associations and building owners, the same applies.

Employee Dishonesty provides coverage for theft of funds by an employee, and “employee” includes the Board of Directors.

What if a Board Member misappropriated funds or stole from the Association?  The Association would need to recoup what was taken.  In addition, you can extend coverage for theft by a property manager by endorsement.  The typical amount of Employee Dishonesty coverage is three months of income.  That can be sales from a store or the maintenance fees of a Community Association.

Another huge reason Employee Dishonesty coverage is needed, (and this goes to building owners as well as Associations), is that any mortgagee is going to require it.  Many Cooperatives have mortgagees, along with each individual unit owner at a Cooperative or Condominium, and building owners.  All of these lenders have insurance requirements that must be satisfied or it will prevent you from closing on your loan or refinancing.

Employee Dishonesty policies are not expensive and can be a stand-alone policy or added to an existing Crime policy already in place.  The cost is minimal versus what you could lose.

If you have a question or want to talk more about insurance feel free to reach out to me.


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