A Florida business has a Crime Insurance policy with Blanket Coverage for employee dishonesty. The policy has a limit of $100,000. During the policy period, it is discovered that three different employees conspired to embezzle funds over several months. Employee A embezzled $40,000, Employee B embezzled $30,000, and Employee C embezzled $50,000. How much will the policy pay for this loss?
- A$40,000
- B$100,000
- C$120,000
- D$90,000
Show answer & explanationAnswer & explanation
Correct answer: B. $100,000
With Blanket Coverage for employee dishonesty, the policy limit applies to the total loss from a single occurrence of employee dishonesty, regardless of the number of employees involved or the number of acts, as long as they are part of a continuous scheme or series of related acts. The total loss is $40,000 + $30,000 + $50,000 = $120,000. Since the policy limit is $100,000, the policy will pay its maximum limit of $100,000.
Why the other options are wrong
- A. This only represents the loss from one employee, not the total loss covered by the blanket limit.
- C. This is the total loss, but it exceeds the policy limit.
- D. This incorrectly sums only two of the employees' embezzled amounts.
Crime Insurance - Employee Dishonesty (Blanket Coverage)
A type of crime insurance that provides coverage for losses due to employee theft or dishonesty, where a single limit applies to the total loss from all dishonest acts by an employee or group of employees, as long as the acts are part of a continuous scheme.
- Covers employee theft/embezzlement.
- Single limit applies to *all* employees.
- Covers continuous or related acts.
- Can be written as a separate policy or endorsement.
Memory trick: Crime Cover: Protect your business from inside and outside thieves.