Employee fraud is rife across Australia. No business is immune from falling victim to the crime, particularly SME businesses. The characteristics of small to medium sized businesses leave them open to employee fraud as managers and business owners tend to have a closer relationship with their employees and a less formal structure, which provides the ideal opportunity for deceitful employees to take advantage of their employer’s trust.
Any organisation that employs people runs the risk of a breach of fidelity. With this in mind, Fidelity Insurance is becoming a more popular cover for Australian businesses.
In order to fully protect your business, it is important to understand fidelity insurance, and what may be covered under such a policy.
1. What is Fidelity Insurance?
Fidelity Insurance reimburses the insured professional for a loss directly resulting from dishonest acts of their employees. Fidelity Insurance protects businesses from costs incurred as a result of forgery, defalcation, embezzlement and other fraudulent acts by employees.
2. What does Fidelity Insurance Cover?
A Fidelity Insurance policy covers losses sustained by the employer as a result of an act of forgery, fraud or dishonesty from an employee. The loss can be of money or goods, for the duration of the policy.
The cover may be required in respect of a single employee or a group of employees.
3. Do you Need Fidelity Insurance?
There are certain circumstances that will determine whether or not Fidelity Insurance is an appropriate cover for your business, for example:
- The record, standing and reputation of the employee
- The “bonafides” of the employer
- The systems in place for checking accounts
- General supervision of the employee
Fidelity Insurance: Key Things to Remember
- The insurance covers a direct financial loss, not a consequential one
- The loss should be of moneys or goods of the insured
- The act should be committed in the course of the worker’s duties
- The theft must be committed by an employee
- Losses that may have been caused by bad accountancy are not payable, they must be supported by evidence of acts of dishonesty
Insurance can be difficult to navigate, speak to your Insurance broker for more information on Fidelity Insurance.
Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.
The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.
