Can Business Insurance Minimize Fraud Loss?

Business insurance is there as part of your backup plan. It is there to help you to cover the costs associated with any losses you may suffer. Today, it is growing in importance for many reasons, especially in the area of fraud. Take a close look at your company and employees. Realize that any one of these individuals could cost your company millions of dollars if an instance of fraud occurs. With business insurance in place, you know that fraud isn’t as likely to shutter your company. Yet, you may wonder what you can do to stop this from occurring in the first place.

Put Insurance in Place

The first way to minimize fraud-related risk is to have coverage in place. Your business insurance should offer a high level of fraud protection. This way, if a fraudulent incident does occur, such as an employee stealing a customer's credit card number, you have the financial tools in place to cover the costs. If this should occur and the customer files a claim against your company, the insurance policy helps cover the cost of that claim as well as any legal costs to fight the claim in a court of law.

Prevent Fraud

That doesn't mean you should not take steps to prevent fraud from occurring in the first place. There are various ways to do so:

• Know your employees and officers well, but don't trust them to always make the right decisions. Everyone in the company should have someone keeping an eye on them to ensure accountability.
  
  
• Determine the most likely sources of fraud for your company and then take steps to minimize these risks. This may include fraud as it relates to customers, employees, contractors, third parties and others.
  
  
• Work to make your business safe by putting in place anti-fraud workplace practices and ensuring these are always followed.
  
  
• Be sure your company has ample checks and balances in place throughout it.
  
  
• Have written procedures that minimize risks of fraud.

With your business insurance in place, any claim made against you for fraud is likely covered by the policy. This limits your exposure to the financial risks associated with this growing type of loss.