Illinois Casualty Insurance State Practice Exam

Which coverage protects an organization from loss due to dishonesty of employees?

1. Property Coverage

2. Employee Dishonesty Coverage

3. Robbery Coverage

4. Commercial General Liability

The correct answer is: Employee Dishonesty Coverage

Employee Dishonesty Coverage is specific insurance designed to protect organizations against losses resulting from the dishonest acts of their employees. This coverage typically compensates the insured for financial losses stemming from theft, fraud, or embezzlement committed by employees. It is particularly important for businesses that handle significant cash or valuable assets, as it helps mitigate the risks associated with internal dishonesty. In contrast, traditional Property Coverage primarily safeguards physical assets from risks like fire, vandalism, or natural disasters, but does not address employee misconduct. Robbery Coverage also focuses on protecting against losses from external theft or robbery rather than internal dishonesty, while Commercial General Liability provides protection against claims of bodily injury or property damage to third parties, which does not include losses from employee dishonesty. Thus, Employee Dishonesty Coverage is the most relevant option for organizations looking to shield themselves from potential losses due to their employees' dishonest actions.