My organization, which provides services to senior citizens, sub-contracts with service companies to provide home health or housekeeping services to our individual senior citizen clients. These individual aides visit our clients' homes to provide these services. We carry employee dishonesty coverage. Would this cover theft from our clients by these sub-contracted aides?

Ohio Subscriber

Unendorsed employee dishonesty coverage only responds to losses that an employer suffers from dishonesty of its own employees. Therefore, unendorsed employee dishonesty crime coverage would not respond to the situation you describe, because: 1) your organization wouldn't suffer a loss; and 2) these aides are sub-contractors, not employees.

There are several ways that appropriate coverage could be arranged. A surety bond could be written with your organization named as the obligee, and the service contractor named as the principal. The condition of the bond would be payment for stolen client property. The bond should guarantee that the sub-contractor would reimburse your organization for stolen client property that your organization must pay for. The bond should be written to cover the maximum value subject to loss. As an example, if an individual contractor provides aides for forty senior citizen clients, the bond penalty should be written to reflect the maximum value you believe could be taken from all forty clients over a period of time. Or it could be written to reflect a maximum value per client over a period of time. Either way, it is important to remember that, in this situation, dishonesty losses will probably involve the theft of small amounts of money or property over time.

Another way to address this exposure would be through a commercial crime policy on which the definition of property is amended to include client property away from your organization's premises. Once again, this type of policy would reimburse your organization for its reimbursing clients for stolen property.

A third possibility would be to require that your sub-contractors extend the coverage definition of personal property of others on their property insurance to include client property away from the contractors' premises.

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