Inner Turmoil

If a stranger breaks into your business and takes cash or property, your insurance will probably cover it. But what if an employee steals from you? Most business insurance packages include employee dishonesty coverage, but it may not be enough.

The limit on employee dishonesty coverage in most standard policies is $25,000. That's a drop in the bucket if your bookkeeper embezzles several hundred thousand dollars. James T. Harrison Jr., president of Florida Insurance School-Continuing Education Inc. in Tallahassee, Florida, has this advice:

• Determine what your potential exposure is and increase your coverage. Your insurance agent and your accountant can help with this evaluation. "Buy as much coverage as you can afford," Harrison recommends.
• Implement strong internal controls and audits. In addition to this being your best defense against theft, you can't get coverage without showing your due diligence.
• Understand the strict definition of employees in the standard policy language. If you use leased workers, independent contractors, temporary staffers or volunteers, they may not be covered unless you add an endorsement to your policy. If you change the status of your workers-for example, if you decide to convert your existing employees to leased employees-notify your insurance agent immediately.
• Make sure other insurance protects your nontangible assets. Employee dishonesty coverage excludes intellectual property.

Jacquelyn Lynn is a freelance business writer in Orlando, Florida.

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