Crime Coverage

Keep your assets protected with fidelity and crime coverage

Employee dishonesty is costly and pervasive, with small businesses being the most vulnerable to occupational fraud and abuse.

Maintaining strong, enforceable internal controls should be a priority for any entity, but controls on their own are not sufficient protection. Fidelity and crime coverage provides an important backstop against the actions of a thieving employee.

Not all fidelity and crime policies are the equivalent, and policy comparisons can be misleading. See why our coverage is one of Canada’s leading fidelity and crime insurance products.

Key policy features that provide peace of mind protection

  • Discovery-based policy trigger (provides uninterrupted coverage, reaching back across organizational history, regardless of prior policy structure)
  • Automatic coverage for subsidiaries
  • Automatic coverage for employee benefit plans
  • An employee definition that includes an array of individuals who support the regular organizational operations
  • A fiduciary definition that includes the necessary non-professional employee benefit plan asset handlers
  • Worldwide coverage

Multiple insuring agreements provide fraud protection for these additional crime exposures

  • Employee theft of client property
  • Loss of money, securities and other property on your premises or banking premises
  • Loss of money, securities and other property while in transit
  • Loss from acceptance of unpaid money orders and counterfeit money (including coins and travelers cheques)
  • Loss from forgery or alteration of covered instruments
  • Loss from computer crime (including computer fraud and computer program and electronic data restoration expense)
  • Loss from funds transfer fraud
  • Claims expense

Termination as to any employee

  • $25,000 threshold relating to known fraud

Dedicated limits of insurance for employee theft exposures

  • These limits of insurance are not shared in the event of an employee loss scheme
  • Employee theft or forgery to protect the assets of the organization
  • Employee theft or forgery to protect the assets of the organization’s employee benefit plans
  • Employee theft or forgery to protect the assets of the organization’s client

Fidelity/crime claims examples

$1,100,000 – An officer and the managers of shipping for a cutlery manufacturer colluded to load trucks with merchandise for later sale at flea markets and small retail shops, while pocketing the proceeds. The controller ultimately reported the scheme to the company.

$47,000 – A job foreman was given a company credit card to handle miscellaneous purchases at the satellite office. He made some miscellaneous purchases, but they were actually for fixtures at his personal residence.

$345,000 – A regional sales director took on additional inventory of computer software products for alleged seasonal sales pushes. In reality, a portion of that inventory was sold “out the back door,” unbeknownst to corporate headquarters. That same sales director had been named “employee of the year” several times over his 17-year career.

$244,000 – An employee altered company deposit slips after the owner of the company approved them. The employee would prepare two deposit slips, with one putting funds into the company’s account and the other putting funds into the employee’s bank account. The embezzlement continued uninterrupted for three years because the employee handled both bookkeeping and deposit activities for the company. As a result of this sizeable loss, the employer was forced to lay off several valued employees.

$1,900,000 – A payroll clerk at a remote facility of an auto parts manufacturer had access to payroll cheques and vacation cheques. Over an eight-year period, the clerk issued duplicate vacation cheques when vacation pay was legitimately requested by employees. The clerk converted the proceeds from the duplicate cheques for her own use.

$260,000 – An executive secretary at an engineering firm submitted duplicate expense account requests for executives’ credit card bills. Payments were made directly to the employees. The secretary submitted the duplicate expense accounts under her own name and account. She converted the duplicate payments for her own use over a four-year period.

$1,600,000 – In less than a year, a sales supervisor caused a loss of $1.6 million to his employer, a manufacturer of electronic parts. The employee converted payments for his own use, which were due from purchasers of genuine manufactured and delivered goods. An attempt was made to cover up the loss by substituting fraudulent cheques drawn upon other third party entities. The manufacturer was underinsured and only $500,000 was paid by insurance, leaving the company on the hook for $1.1 million.

$167,000 – Four employees defrauded their employer through a phony billing scheme. The employees, including a supervisor, established fictitious vendors and submitted bills for work performed by other genuine vendors. The employees converted the bill payments for their own use.

$167,500 – A plan trustee and owner of a company was using money from an employee benefit plan to pay business expenses of the named insured, as well as expenses of other businesses owned by the trustee/owner.

For more information about our fidelity and crime coverage, please call your insurance broker or find a Travelers Canada broker in your area.

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