Employee fraud can continue for months or even years before it is detected.

Crime Insurance therefore commonly uses specific rules about when a loss is discovered and when it must be notified.

What does discovery mean? #

The precise definition depends on the policy.

Generally, discovery occurs when the insured first becomes aware of facts that would cause a reasonable person to believe that a covered loss has occurred or may have occurred.

The business may not yet know the final amount of the loss.

Does the fraud need to occur during the current policy period? #

Not always.

Some Crime policies can respond to losses caused by dishonest acts occurring before the current policy period, subject to:

• The policy wording.
• Prior insurance.
• Retroactive provisions.
• When the loss was discovered.
• Other policy conditions.

What happens if fraud is discovered after the policy expires? #

Crime policies can contain a discovery period allowing certain losses to be reported after expiry where the policy requirements are satisfied.

The length and operation of this period vary between insurers.

Why is prompt notification important? #

Once suspicious activity is identified, the business should not wait until every transaction has been investigated before contacting Webber Insurance.

Prompt notification allows the insurer to:

• Assess the circumstances.
• Appoint investigators where required.
• Preserve recovery rights.
• Provide guidance about next steps.

Should suspected employee fraud be investigated internally first? #

Initial checks may be reasonable, but substantial investigations or confrontation of suspected employees should be considered carefully.

Notify Webber Insurance early where there is a realistic possibility of an insured loss.