Fraud can cause significant financial stress to an organisation, including significant cash flow problems. Obtaining fidelity insurance may help with that problem. Fidelity insurance covers an organisation for losses caused as a result of fraud.
An organisation needs to make an informed decision as to whether it wants to maintain fidelity insurance or not. When considering this issue, questions to consider include:
An organisation needs to make an informed decision as to whether it wants to maintain fidelity insurance or not. When considering this issue, questions to consider include:
- What will the insurer require to enable a payment to be made (ie. Will it require a full investigation to be completed, will the insurer require a conviction?)
- How long will it take for the insurer to make a payment? The longer the time it would take, the longer the organisation could suffer financial stress as a result of the fraud.
- What is the excess of the claim and what is the maximum payout?
- What is excluded from the policy? For example, one policy I saw excluded forgery – this could potentially exclude fraud where an employee forges a signature on an organisations cheque.
Again, an organisation needs to make an informed decision considering the cost of the policy and the benefits that may flow from the policy if a claim is needed to be made.
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