Q: A commercial client has a third-party requirement of $1 million of employee dishonesty coverage. The agent can obtain a quote for $1 million of employee theft, but not employee dishonesty. Are employee dishonesty and employee theft the same type of insurance? 

Response 1: Your mention of a third-party requirement makes me wonder exactly what the requirement is. If they're asking for coverage of theft of the third party's property by your client's employee, that's a very different animal than employee dishonesty, which usually means theft of the employer's property by an employee.

Response 2: Theft by an employee is employee dishonesty. Theft by a non-employee is referenced as simply theft. You may want to consider an alternative market, as each will have disparate underwriting conditions.

Be forewarned that significant management controls will be required of the policyholder. Those may include dual signatures on checks, CPA-audited statements, different individuals reconciling the deposits and review at months end, and more. Deductibles may be imposed as well. These conditions should be discussed with underwriting and the policyholder. This should be documented by a signature of senior management.

Response 3: The old ISO Commercial Crime Form CR 00 01 used the term “employee dishonesty." The more recent ISO Crime Form CR 00 21 uses the term “employee theft." While the form definitions are not identical, they are substantially the same.

Response 4: There is a huge difference. Typically, employee dishonesty is a fidelity bond and only covers theft by employees of the employer's property—that is, a loss suffered by the insured.

Employee theft insurance is a liability policy and protects the insured's liability for theft by their employees of the property of others.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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