As a small business owner in New Hampshire you want to believe that you can trust your employees.  However, it is possible that your company's funds could be embezzled by the very employees you entrust to handle it.  This crime not only impacts your bottom line, but hurts company morale and the trust of all other employees.  Fortunately, insurance can be purchased to cover employee theft and dishonesty, but do not make the assumption that it is automatically included in your commercial insurance package because often it is not.

What is Embezzlement?

Embezzlement is the theft or misappropriation of funds placed in one's trust.  A common example would be when a cashier at a NH store, who has the job responsibility of handling the company's money, is stealing from the till.  When an employee has access to but not ownership of the funds, a theft is considered embezzlement.

In New Hampshire, the punishment for embezzlement is determined based on the amount stolen.  Fines can be as much as $4,000 or double the amount taken and up to 15 years in prison, but you still need to get the money back.  It is a serious crime, and one that no small business owner ever hopes to experience, but it does happen.  All you have to do is Google search "NH Embezzlement" to see a very long list of actual cases within our community, such as more than $300,000 stolen from a local butcher shop from the controller or bookkeeper accused of embezzling $400K+ from a family business.

How do I Protect my NH Business Against Embezzlement?

Insurance is a tool to protect against the impact of embezzlement, but given the blow to morale and the bottom line, you will want to try to prevent it from happening in the first place.  Here are a few tips to help reduce the chance of employee dishonesty:

• Don't leave cash lying around
• Don't use signature stamps for checks
• Minimize the number of employees who have signing authority on bank accounts
• Do background checks
• Divide job functions between different people in preparing checks, receiving payments, making deposits, signing checks, and reconciling bank statements
• Consider duel signatures for any checks in excess of $5,000

What Type of Commercial Insurance Covers Employee Theft or Embezzlement?

Do not assume because you have a commercial insurance policy, that it will automatically cover employee theft or embezzlement.  Though it is a type of theft, insurance companies can customize this specific risk to be excluded from coverage, limited or included depending on the policy.  Because of this, it is critical that you speak with an insurance professional to understand what your policy provides if anything, and then determine how much you need to protect your business.

Employee theft insurance is also known as employee dishonesty insurance.  The amount of coverage you need and the premiums you will pay are determined by the amount of cash and property entrusted to employees, how many employees you have, the controls you currently have in place to prevent dishonest acts, and other factors.  Embezzlement insurance can cover all employees or specific named employees.  Your insurance agent can help you choose which is right for you given the nature of your business and how many employees have access to your money and property.

Even though no one wants to believe that their business will be hit with a crime like embezzlement, having employee theft coverage as part of your commercial insurance package is an important policy that can help protect your business from significant financial losses.