Employee Theft and Crime Bond Checklist
Most owners trust the people they hire, and most of the time that trust is earned. This checklist covers the everyday controls that keep a dishonest act from going unnoticed and the details to gather before you ask about a crime bond.
Why a checklist and not just a policy
Employee theft rarely looks dramatic. It is a register that comes up a little short each week, a vendor that does not exist, a refund issued to a friend or a company card used for personal purchases. Losses like these grow slowly because the person responsible is often the one trusted to catch them.
A crime bond is written for losses from dishonest acts, and the California Department of Insurance describes crime coverage as protection for business assets such as merchandise, money and securities. The policy and your controls work together: underwriters ask about the controls, and sound controls shorten the time a loss can run before someone notices.
Separate the money jobs
- Split duties so the person who writes checks or sends payments is not the person who reconciles the bank statement.
- Have bank and card statements go straight to the owner or a second person, unopened.
- Require a second sign-off for payments above an amount you choose.
- Lock down the vendor list: adding a vendor or changing bank details takes two people.
- Read payroll registers for names you do not recognize and pay rates that changed without a reason.
In a very small office, full separation is not always possible. When one bookkeeper handles everything, the owner can still read the statements each month, look at check images and ask about anything unfamiliar. Those few minutes are the control.
Cash, inventory and company cards
- Count cash with two people at the end of each shift and compare the count with the register report.
- Deposit daily and match each deposit slip to the sales record.
- Track voids, refunds and price overrides by employee and look for patterns.
- Count high-value inventory on a schedule and spot-check it without notice.
- Set limits on company cards and read the statements line by line.
Restaurants and retail stores, where cash changes hands all day, lean on these steps most. Ask how a crime policy treats money inside the premises compared with money on its way to the bank, since many forms handle the two separately.
Hiring and the people side
Careful hiring is the first control. Check references, confirm past employment and ask about gaps. State and local rules limit what employers may ask and when, so have an employment attorney review your hiring steps before you rely on them.
Required time off is a long-standing control that still works: schemes that need daily attention tend to surface when the person running them steps away for a week. Rotate tasks where you can, and make sure more than one person knows how each money process runs. Our guide to hiring your first employee covers the insurance steps that come with adding staff.
Who counts as an employee matters to the policy too. Crime forms define the term, and temporary staff, leased workers, volunteers and independent contractors fall inside or outside that definition according to the wording. If your business relies on contractors, the guide to employees vs. independent contractors in California explains the classification side.
Client property and service contracts
Businesses that send staff into homes and offices face a second kind of theft question: a client’s jewelry, electronics, cash or files going missing during a visit. Cleaning companies, home-service trades, pet sitters and property maintenance crews meet it often, and larger commercial accounts frequently make a bond a condition of the contract.
- Keep a key and alarm-code log showing who holds access to each client site.
- Record who was on site for each visit, with arrival and departure times.
- Agree with each client how valuables and cash on the premises are handled.
- File the contract’s bond requirement, the amount it names and its deadline with the client record.
The cleaning business insurance checklist covers the rest of a cleaning company’s paperwork.
Fraud from outside the business
Not every loss starts inside. Forged checks, counterfeit bills and fake payment requests by email come from outsiders, and Travelers lists forgery, computer fraud, funds transfer fraud and social engineering fraud among the losses its fidelity and crime coverage addresses. Ask which of those parts a quote includes, since each is often optional and carries its own limit.
Payment fraud by email sits where crime and cyber insurance overlap. Confirm any change in payment instructions by calling a number you already have, and see the cyber insurance readiness checklist for the system-side steps.
What to gather before asking about a crime bond
- Headcount, with a note on which roles touch cash, checks, payment systems or client keys.
- A short description of the controls on this checklist you already use.
- Annual revenue and the most cash kept on hand at any one time.
- Any client contract that names a bond amount or asks to be listed as a loss payee.
- Past theft or fraud losses and what changed afterward.
Crime policies spell out how soon a discovered loss must be reported and what proof is needed, so read those conditions before you ever need them, and keep statements, logs and records intact if something looks wrong.
A few useful answers
Common questions
What is separation of duties in a small business?
It means splitting money tasks so no single person can both move funds and check the records. A common split puts payments with one person and the monthly bank reconciliation with another, often the owner.
How quickly should a business tell its insurer about suspected employee theft?
Promptly. Crime policies set conditions for notice and proof of loss, so contact your agent or insurer as soon as you suspect a loss and keep the related statements, logs and records intact.
Is employee theft a real concern for a business with only two or three employees?
Small teams often carry more exposure, not less, because one person may handle every money task with little oversight. A short list of controls and a conversation about a crime limit both fit a business of that size.
What is a client-property bond?
It addresses a client’s money or property taken by your employee while working at the client’s site. Service contracts often name an amount, so bring the contract when you ask about one.
How does required time off help catch employee theft?
Many schemes need daily attention to stay hidden. When the person handling a task steps away and someone else covers it, irregularities tend to surface, which is why required time off is a common internal control.