Claim Scenario: Invented Employees

We occasionally like to share various claims scenarios that we come across with restoration contractors. We share the information behind the claim and the insurance coverage that responded to the lawsuit.

Claim Scenario:

We recently came across a scenario where the office manager (payroll manager) for a restoration contractor added several relatives to the payroll. He would deposit paychecks into the phone employees’ bank accounts for almost a year. After he left the company, the new office manager discovered the scheme.

Result:

The crooked office manager had deposited more than $100,000 into the various bank accounts.

Insurance Implications:

The restoration contractor had, thankfully, purchased a crime policy that included coverage for employee dishonesty, employee theft, forgery, and alterations. Their policy had a limit of $250,000, so insurance could cover the entire claim.*

*Please remember that all policies are different. It is essential to consult with your agent to determine how your insurance policy would react in the above scenario.