The U.S. leads all first world countries with the highest percentage of population with a criminal record. Keep in mind, not all of these violators are guilty of serious crimes. Many are guilty of minor teenage pranks or a decades-old shoplifting incident.

In the digital age, criminal records aren’t easily forgotten. This is a significant problem for the affected individuals, but it’s also a concern for any business that would like to employ them. Employers who might have in the past been inclined to automatically disqualify employment to any applicant with a criminal record are now under increasing pressure to take a different approach.

Of course, a solid business insurance program includes an employee dishonesty policy. However, if you are solely relying on that to cover you if you suffer a loss from an employee with a record, think again. Most employee dishonesty policies indicate that coverage ceases for any employee immediately upon discovery by the policyholder of a dishonest act committed by that employee.

Translated from insurance-speak, that means that if you do a criminal background check on a prospective employee, find something, and go ahead and hire them anyway, your chances of ever recovering on an employee dishonesty claim involving that employee may be impaired.

The key to remember here is that the term "dishonest act" is not defined in the policy, which gives a claims adjuster wide latitude in interpretation of the exclusion. One could reasonably expect that the closest scrutiny of this definition would occur with the largest claims.

Moving Forward…Call Kapnick

Policy language can be tricky to decipher. That’s why it’s important to contact Kapnick. We’ll help you get all the answers – and the coverage you need – to help protect your business.