1. SCOPE OF INSURANCE:

• The insurance covers any loss caused by forgery, embezzlement, larceny or fraudulent conversion of monies or stock – in trade, whether belonging to the insured or held in trust by him- committed by the employed person in connection with his employment as specified in the policy, during the period of the policy and the uninterrupted continuous of the employment in the service of the insured.
• The indemnity provided will be for the amount of money lost or for the value of stock – in trade comprising such loss to the limit of the respective sum insured applicable against the name of the employee (in case of an individual or collective policy) or to the limit of the aggregate amount of guarantee (In case of floating policy)
• Discovery Period: The loss shall be discovered :
  • Within 6 months after the death, dismissal or retirement of the employed, or
  • Within 6 months after the policy as expired – whichever first occurs.
  • Once the discovery period has expired, no claim can be raised even if a fraud is discovered at a later date. This is equitable, as the insured’s system of check should be such that, even the most serious defalcations should come to light within a reasonable time.
• It is to be noted that the policy covers certain specified acts of dishonesty committed by the employee and does not cover fraud or dishonesty in general sense, which would include breach of confidence or want of financial integrity resulting in a loss to the Employer. Unexplained losses or shortages discovered at stock-taking or not covered, nor any further loss in respect of the employee concerned, once the default is discovered. Commercial Fidelity Guarantee involves three parties:
  1. The insure
  2. The insured, who is usually an employer
  3. The employee or another person whose honesty is guaranteed.

Preferably the policy should be restricted to cover only full-time employees and employers has to declare all facts pertaining to him.

The proposal should be considered from firms of reputed and whose business methods including accounting system, supervision and cheque have to be satisfactory.

2. TYPES OF POLICIES

There are three types of policies

• Individual Policy: Individual policy issues where one individual is to be guaranteed. Name of the employee, occupation/Duties and the Sum Insured should be clearly stated.
• Collective Policy: Collective policy will be issued to cover several employees of the same employer for varying amounts of indemnity. The policy should incorporate a schedule containing the names and duties of guaranteed employees with the amount of guarantee set against each name.
• Unnamed Floater Policy: Unnamed floater policies are normally issued for a group of employees of the same status and class, duties and responsibilities. Therefore check whether same floated amount applies to different classes of employees whose status and remuneration are vastly different.

Under this policy, the no of a person covered has to be fixed and this S.I which is fixed will be floating among the insured persons.

3. If there is previous claims history, we have to ascertain whether satisfactory arrangements have been made to prevent the recurrence.