Fidelity Insurance: 3 Reasons Why Business Owners Must Report Claims as Soon as Possible

Employee theft can ruin a business, especially if a company has limited cash flow. As such, to protect their assets against this type of dishonesty, some Australian companies take out fidelity insurance. Fidelity insurance can protect your company against the risk of employee theft, but you must report claims as soon as you realise that somebody has stolen from you. Find out why.

1. Help the insurer build a case against a third-party

In many cases, an insurance company will seek to recover its losses through a fidelity insurance claim from a third-party. For example, if an employee cashes forged cheques from your company account, the insurance company may try to claim the lost money back from the bank if there is evidence that bank employees failed to follow due process.

To subrogate the claim from another party, the insurance company needs to act on the case as quickly as possible. In the case of the forged cheques, some banks set rules that say you must make a claim for these issues within a certain period. If you leave it too long, you can invalidate the insurance company's ability to subrogate the cost of the claim.

2. Avoid liability for the claim

Fidelity insurance policies normally include strict rules about claims liability. Given the potential value of these claims, the insurance company must make sure that your business incurred losses solely because of an employee's dishonesty.

These claims become more complex where the insurance company discovers that the employer failed to act upon the problem straight away. For example, if you treat a case of employee theft through your internal disciplinary procedure, the insurance company may conclude that you are partly liable for any losses that later occur, which could jeopardise your claim.

To make sure you get the best possible payout

Fidelity insurance claims are nearly always subject to a rigorous and lengthy claims assessment process. A loss adjuster will investigate the details of the claim, and his or her recommendations will determine what proportion of the claim the insurance company will pay for.

If you don't report the theft to the insurer straight away, the loss adjuster will need to understand the reason behind the delay. Some business owners mistakenly believe that their investigations may help speed up or support the case because they know their employees so well, but the loss adjuster may take the opposite view. Don't let your actions get in the way of the investigation. Report your claim immediately, and let the loss adjuster do their job.

Fidelity insurance can protect your business from employee theft, but it's crucial that you follow the terms and conditions of your policy and report problems as soon as you discover them. Talk to your business insurance broker for more advice.