Claim Scenario: Invented Employees

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

Claim Scenario:

Recently we came across a scenario where the office manager (payroll manager) for a restoration contractor 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:

Thankfully, the restoration contractor had purchased a crime policy that included coverage for employee dishonesty, employee theft, forgery, and alterations. Their approach had a limit of $250,000, so insurance was able to 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 scenario mentioned above.