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ARI Blog: Article

Claim Scenario: Invented Employees


From time to time we 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 claim.

Claim Scenario:

Recently we came across a scenario where the office manager (payroll manager) for a restoration contractor actually added several relatives to the payroll. He would then 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 made deposits totaling more than $100,000 to 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 was able to cover the entire claim.*

*Please remember that all policies are different. It is important to consult with your agent to find out how your insurance policy would react in the above-mentioned scenario.

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