Illinois Casualty Insurance State Practice Exam

Who benefits from the Employee Dishonesty Coverage?

1. Insurance agents only

2. Organizations suffering from employee fraud

3. The employees themselves

4. Independent contractors

The correct answer is: Organizations suffering from employee fraud

Employee Dishonesty Coverage is designed to protect organizations from financial losses resulting from fraudulent acts committed by employees. This type of coverage is essential for businesses that want to safeguard their assets and maintain financial stability in the event of theft, embezzlement, or other dishonest acts perpetrated by employees. Organizations benefit directly because they are the ones facing the financial consequences if an employee commits fraud. By having this coverage, companies can recover some of their losses, thereby reducing the impact on their operations and overall health. The other options do not align with the primary purpose of this coverage. While insurance agents may help place such coverage, they do not receive benefits from it directly. Similarly, employees and independent contractors are not beneficiaries of this type of coverage, as it is focused on the protection of the employer's interests in the face of dishonest acts. Therefore, the primary beneficiary of Employee Dishonesty Coverage is indeed the organization that suffers from employee fraud.