An employee of Black Silver removed property from each of the company's five stores. The actions took place over a two-year time period and resulted in an employee theft loss of $65,000. Black Silver was insured by Sequoia Insurance under a Businessowners policy with a coverage extender Form SEQ 1525 attached. When presented with the claim, Sequoia initially offered $10,000 and then $20,000 but Black Silver demanded $65,000. The trial court agreed with Sequoia, but Black Silver appealed.

Click here to see how the appellate court ruled.

The ISO businessowners policy provides coverage for employee dishonesty as an optional coverage. The available limits are $5,000, $10,000, $25,000, $50,000 or $100,000. Some insureds insist that a minimal limit is acceptable but consider how one employee in a two-year time period was able to take $65,000. If a loss covers multiple years, all thefts during that time period could be covered, but only if there had been no lapse in employee dishonesty coverage and if the current limit of insurance is sufficient.

Click here to read the PF&M analysis of the Employee Dishonesty Optional coverage provided in the ISO BP 00 03-Businessowners policy

Employee dishonesty is an underpurchased coverage because many clients are convinced that they are excellent readers of human character in their hiring practices or that they have adequate safeguards in place to prevent any losses. Unfortunately, some employees will steal and those great safeguards can't stop everyone.

Click here for two emarketing articles you may want to use in order to alert them about this important coverage.

Your successful clients need more coverage because as they expand, their exposures expand with them. This is particularly true with employee dishonesty. As stock increases, sales increase, the number of employees increase and/or the number of locations increase, the limit of employee dishonesty coverage should also increase.

Click here for a business building letter you could use to encourage your clients to increase their limits before a loss occurs and the limit is inadequate to coverage the loss.