For small businesses, which frequently endow a few employees with significant responsibility, employee fraud creates a risk that could potentially sink the business.
Chicago, IL (PRWEB) April 18, 2013
“Trust but verify” was a phrase President Ronald Reagan coined when dealing with the Soviet Union. However, it is also a solid policy for small-business owners who cede control of a customer’s proprietary and financial information to employees. While owners should trust their employees, they should also verify that their insurance policies are capable of protecting against any rogue actions that could negatively impact the business, according to a new TechInsurance alert.
TechInsurance, the nation’s leading online insurance provider for information technology businesses, today issued a warning that small businesses are particularly vulnerable to employee fraud. The Association of Certified Fraud Examiners (ACFE) estimates that one case of employee fraud can last up to 18 months and costs an average of $140,000.
“Fidelity Bond Insurance is a type of coverage that small businesses often purchase to comply with a client’s contract,” said Ted Devine, CEO of TechInsurance. “Yet for small businesses, which frequently endow a few employees with significant responsibility, employee fraud creates a risk that could potentially sink the business.” That’s because most general insurance policies exclude coverage for acts that are considered “intentional,” including acts that are wrongful or illegal.
And, Devine notes, fraud is more challenging to detect in IT businesses. “Unlike a retail store, a technology business cannot monitor theft by installing cameras alone as it may not protect their data assets. Instead, having access to a customer’s network and financial information opens up the possibility for a more sophisticated level of fraud.”
What’s more troubling is that fraud is typically an employee’s first offense, ACFE says – meaning that background checks and employment screenings are ineffective predictors of this behavior. When considering a purchase of Fidelity Bond insurance, TechInsurance recommends that small businesses consider the following:
- Which employees have access to bank accounts: The fewer people have access to company funds, the smaller the likelihood that you’ll experience an event that requires you to make a claim on your Fidelity Bond Insurance.
- Whether the business clients require Fidelity Bond coverage: Most tech firms purchase third-party Fidelity Bond policies, which covers theft of money, equipment or other assets from you or one of your clients committed by employees on clients’ premises or via remote access to clients’ systems.
TechInsurance gives small and micro businesses access to the nation’s most respected, A-rated business insurance carriers as well as industry-trained licensed insurance agents experienced in identifying the insurance products to meet their unique needs. For more information on TechInsurance’s offerings, please visit http://www.techinsurance.com.
TechInsurance is a web-based insurance agent that offers IT businesses and professionals fast, easy, one-stop shopping for all their business liability insurance needs. TechInsurance was founded in 1997 in response to the difficulty IT services firms had finding high-quality, affordable business insurance. With more than 51,000 businesses insured since 1997, the company has grown to become America's leading online provider of business and professional insurance for computer consulting and web services companies, as well as other IT service businesses. For more information, visit http://www.techinsurance.com.