Depending on the justice system to restore embezzled funds is often a forlorn hope. Only 14 percent of businesses (including charter schools) make a full recovery from guilty parties. Standard general liability insurance doesn’t cover losses by theft. Fortunately, there is special coverage available called crime or fidelity insurance.

This type of policy typically covers both internal and external crime. Burglary, robbery, counterfeiting, and wire fraud are examples of crimes usually committed by those outside the school. Internal crime, also called employee dishonesty, involves more than cash. Employees also steal inventory, equipment, supplies, and information.

The policy defines employees as being tricky because others besides full-time, permanent staff might have access to assets and sensitive information. The most comprehensive policies broadly include leased, temporary and seasonal employees, non-compensated officers, former employees, and board members acting as consultants, interns, and attorneys on retainer.

Coverage is either on discovery or loss-sustained basis.

With loss-sustained coverage, the event must occur during the policy period. Discovery allows claims made for losses discovered during a covered period – even if they happened before the policy was in force. Since many thefts occur in small amounts over periods of months or years, the discovery policy may be best if your company has been operating without it and you are at risk.

Special coverage options include protecting management’s personal assets – covering identity theft and unauthorized use of credit cards, a risk when a manager’s personal information is available at the office, on expense reports, for example. Coverage of subsidiaries and employee benefit plans are often features of crime policies.

Several factors determine the cost of crime insurance, some of which you can manage. One primary factor is your industry and the type of exposure normally encountered.  But the strength of your internal controls can influence the premium cost. So does your claim history. The rest of the cost will be dependent on the company you chose and the depth and breadth of coverage.