Client Question – The People You Hire…

From a Client:

One question: When hiring applicants – what is the insurance view on hiring individuals that have had some credit issues in the past, i.e. delinquency, foreclosure, and charge-offs, if they are in a non-cash handling position?


My Reply:

If your regulators are OK with them the insurers are OK.

The only issue would be the following language regarding the employee dishonesty coverage section:

This bond terminates as to any Employee… as soon as any Insured, or any director or officer of an Insured who is not in collusion with such person, learns of any dishonest or fraudulent act committed by such person at any time, whether in the employment of the Insured or otherwise, whether or not of the type covered under (Employee Dishonesty), against the Insured or any other person or entity… unless the Insured receives a written waiver of this termination from the Underwriter.

However, termination as to any Employee shall not take place if the dishonest or fraudulent act occurred prior to employment with the Insured, was not related to that person’s employment and involved an amount less than $2,500.

So, if the problem is dishonesty or fraud then they would not be covered for employee dishonesty without a waiver from the insurance company.