Oct 6, 2025

Does Crime Insurance Cover Employee Theft?

Employee theft isn’t just an occasional headline. It’s a persistent problem that drains businesses of billions every year. 

According to a National Retail Federation survey, U.S. retailers reported $112.1 billion in shrink losses in 2022. Theft alone — both internal and external — made up nearly two-thirds of that total, with employee theft accounting for 29%. Meanwhile, research by the Association of Certified Fraud Examiners shows that occupational fraud siphons about 5% of annual corporate revenue.

For small businesses in particular, one incident can destabilize operations and erode trust from the inside out. That’s why crime and fidelity insurance is so essential: It offers a safeguard against one of the most common but overlooked threats companies face.

What Is Covered Under Crime and Fidelity Insurance?

Crime and fidelity insurance, sometimes referred to as fidelity and crime insurance, is designed to protect businesses from losses caused by dishonest acts. Coverage typically includes:

  • Employee theft, including cash, inventory, or company property
  • Embezzlement or diversion of funds
  • Forgery or check fraud
  • Credit card and computer fraud
  • Fraudulent transfers or misappropriation of assets

For companies worried about internal theft, this policy is one of the most effective defenses. It ensures that when employees break trust from within, the financial impact doesn’t fall solely on the business.

Why Businesses Need Protection Against Employee Theft

Employee theft isn’t confined to one type of business — it affects companies of all sizes in many different industries. From a cashier pocketing cash to a bookkeeper manipulating financial records, theft takes many forms. 

HR Acuity notes that common examples include skimming from cash registers, falsifying expense reports, stealing supplies, or even misusing company credit cards.

The statistics are sobering. A Business.com survey found that 67% of employees admit to committing at least one type of workplace theft.

For smaller companies, even a modest theft can cause serious setbacks in payroll, operations, or client service. Larger organizations face reputational damage and regulatory scrutiny if fraud goes undetected. In both cases, crime and fidelity insurance provides critical financial recovery.

Tips To Help Businesses Avoid Employee Theft and Crime

While insurance provides a safety net, proactive steps can reduce the likelihood of theft occurring in the first place.

  • Strengthen internal controls: Require dual approval for transactions, and maintain separation of financial duties.
  • Monitor inventory and cash flow: Conduct routine audits and set up alerts to flag unusual activity.
  • Leverage technology: Install access controls, surveillance cameras, and accounting software that help spot irregularities.
  • Encourage an ethical workplace culture: Foster transparency, create anonymous reporting channels, and reward integrity.
  • Screen and train employees: Run background checks before hiring, and offer fraud-prevention training as part of ongoing development.

These measures not only deter theft but also create a culture of accountability that strengthens the business overall.

Tackling Employee Theft Head-On

Employee theft is an uncomfortable reality, but ignoring the risk can be far more damaging than addressing it head-on. Fidelity and crime insurance provides a financial cushion when the unexpected happens. Combined with strong internal controls, it’s a key part of safeguarding assets and keeping operations secure.

Oakwood Risk Insurance Solutions helps businesses identify their unique vulnerabilities and tailor policies that provide comprehensive protection. Contact us today to protect your company from internal threats.

FAQ About Fidelity and Crime Insurance

What is covered under crime insurance?

Crime insurance typically covers employee theft, fraud, forgery, embezzlement, and other dishonest acts that result in financial loss.

What type of insurance covers employee theft?

Employee theft is generally covered under crime and fidelity insurance, which reimburses businesses for losses tied to dishonest employee behavior.

How is fidelity insurance different from other liability policies?

Unlike liability policies that cover claims made by outside parties, fidelity insurance specifically protects businesses from financial losses caused by their own employees’ dishonest actions.

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