Can business insurance cover employee theft?

Business Insurance Coverage for Employee Theft in Michigan

In Michigan, businesses can protect themselves from employee theft through specific insurance policies designed to cover such risks. Understanding the right coverage and operational steps is essential for effective risk management.

Types of Insurance Covering Employee Theft

• Fidelity Bonds: These bonds specifically cover losses caused by dishonest acts of employees, including theft of money, property, or inventory.
• Crime Insurance: Broader than fidelity bonds, crime insurance policies can cover various types of employee dishonesty, including theft, fraud, and forgery.

Operational Considerations

• Policy Selection: Choose a policy that clearly includes employee theft coverage. Discuss with your insurance agent to ensure the limits and terms fit your business size and risk profile.
• Employee Classification: Properly classify employees and maintain thorough recordkeeping to support claims if theft occurs.
• Internal Controls: Implement operational controls such as segregation of duties, regular audits, and inventory tracking to reduce the risk of theft and support insurance claims.
• Reporting Requirements: Notify your insurer promptly after discovering theft and provide necessary documentation to comply with claim procedures.

Additional Michigan-Specific Notes

As of 2026, Michigan does not mandate businesses to carry employee theft insurance, but having coverage is a practical step to safeguard assets. Employers should also consider how this insurance integrates with overall compliance, payroll security, and bookkeeping practices.