If you have any questions about insurance terms, please see our
What types of insurance does my
business need? How do I find out?
Determining what types of insurance coverage that your business
needs is done with an in-depth "risk analysis." This can be
completed by an insurance broker who has experience in your
industry. Contact us and talk to a Rhodes & Williams insurance
What is a risk analysis?
A risk analysis looks at a business' risks and determines which
ones are significant enough that they should be covered by an
insurance policy. It is very important to make sure your main risks
are adequately insured (and that you're not insuring risks that are
What is "business
Business insurance is no single type of insurance coverage, but
a term to describe a variety of different insurance coverages that
are particularly relevant to businesses and their exposures to
risk. Business insurance also includes coverages that are required
by law (unemployment insurance, worker's compensation, etc.).
Do I need errors and omissions
If your business provides consultation, sales, design or
services to clients, you should consider errors and omissions
insurance. Errors and omissions insurance, sometimes called
"professional liability insurance" or "malpractice insurance,"
protects you if a client or customer claims you did something
wrong. It generally covers important financial costs like attorney
fees or possible settlements.
Do I need special insurance
Every business has unique risks, and whether or not those risks
justify specialized insurance coverage (crime, kidnap and ransom,
sewer back-up, etc.) can only be determined by an insurance broker
with experience in your industry. To find out if you need any type
of special insurance coverage, contact us and talk to a Rhodes
& Williams insurance broker.
needs Employee Dishonesty and how much?
The key to protecting your business from Employee dishonesty is
loss control and appropriate limits. Don't think it can
happen to you? We have heard clients say that they are not at
risk because they are a small company with little petty cash, good
controls and long-term, loyal employees. Unfortunately, one
of them said this just as they cancelled the coverage... just over
a year before they had a loss of over $100,000.
Employee dishonesty risk management starts with checking prior
history. Other good steps are outlined in the questions in
typical employee dishonesty applications. For example:
- Audits by independent CPA that includes a review of internal
- Two signatures required on all checks over a nominal
- Separation of duties and mandatory vacations for
- Confirmation of statement balance by someone outside the
accounts payable unit
- Stamping invoice "paid" when checks are issued
- Joint control of securities by two employees
- Regular inventory of valuable equipment and storing it in
- Computer controls including:
- Automatic prevention of repeated attempts of unauthorized
- Exception reports generated for unauthorized sign-in or
repeated access attempts
- Segregation of duties between programmers and operators
- Individuals who can authorize checks should not also be able to
The answer to the question of what is an adequate employee
dishonesty limit is … more than you think. Because employee
dishonesty losses can go on undetected for years, even relatively
small businesses can suffer very large losses. The record is
probably held by a small Michigan County whose treasurer stole $1.2
million even though the county's annual budget is only a little
over $4 million. Incidentally, he stole the money to fund his
investment in a Nigerian Internet swindle! A good starting
point is 10 percent of annual budget, sales, etc., but note that in
the case of the county, the amount stolen was more than 25 percent
of one year's budget.
Employee dishonesty is an exposure that gets little respect. It's
time that it did!