Fidelity and Crime Insurance

What Is Fidelity and Crime Insurance?

Fidelity and crime insurance protects organizations from common risks, including losses from employee dishonesty, credit card forgery, computer fraud, theft, and the disappearance or destruction of property.

Even with trustworthy employees, internal and external oversight, and strong risk management controls, no business is immune to occupational fraud. Fraud can strike any organization—large or small—at any time, making it essential to have reliable fidelity and crime coverage in place.

Theft can impact any organization, regardless of size, industry, or purpose. If your business isn’t prepared to protect itself against employee or volunteer theft and forgery, the consequences can be severe—not only financially but also in terms of reputation. On average, organizations lose approximately 5% of their revenue to fraud each year, and 20% of fraud cases lead to losses exceeding $1 million.

For any business, rebuilding a reputation damaged by insider theft can take years. Additionally, fraud can lower the morale of employees and volunteers, who may feel violated and betrayed by a trusted colleague.

Even with stringent internal controls, background checks, and audits, fraud can still occur. Criminal activities like credit card forgery, computer fraud, and property theft can remain undetected for months or longer, sometimes surfacing only by chance.

To help protect your organization, consider these steps:

Implement strong, enforceable internal controls

• Effective internal controls might include immediately recording cash receipts and depositing them daily, having a separate person reconcile bank accounts, and assigning a single custodian to manage petty cash. These practices can add layers of accountability and reduce opportunities for fraud.

Encourage employees and volunteers to report suspicious behavior

• Over 40% of fraud cases are uncovered by tips, according to the Association of Certified Fraud Examiners. Educate staff on recognizing signs of fraud and create an environment where they feel comfortable reporting it. Make sure your board of directors understands its role in preventing and addressing fraud.

Adopt a whistleblower policy

• Having a whistleblower policy in place lets employees, volunteers, and board members report concerns without fear of retaliation. This is crucial, as more than 45 states have laws protecting whistleblowers, and a policy can help your business comply.

Consider crime & fidelity insurance coverage

• Crime insurance covers common fraud threats, including losses from employee dishonesty, credit card forgery, computer fraud, and property theft or damage.

Choose an insurance partner that supports your recovery

• Some insurers offer recovery management teams to help businesses regain losses. For example, Travelers’ team assists organizations by identifying recovery sources early on, allowing investigators to take swift action to secure assets and recover damages.

These proactive measures can help safeguard your organization from fraud and the financial and reputational impacts that often follow.