Embezzlement is the dishonest taking or misuse of money or property by someone who was entrusted with it. In plain language, it happens when a person with authorized access steals or diverts funds or property instead of simply breaking in from the outside.
Why the term matters in insurance
Embezzlement matters because many business losses involving trusted insiders are not ordinary theft claims. Coverage may depend on whether the loss falls within:
- employee dishonesty coverage
- fidelity or bond-type protection
- crime policy wording
- exclusions in a basic property form
The insured therefore has to match the loss facts to the correct coverage grant instead of assuming every missing asset is covered as simple theft.
Claims issues that matter
Insurers handling embezzlement claims often investigate:
- who had custody or control of the property
- whether the wrongdoer was an employee or another entrusted person
- whether the loss was direct and provable
- whether the policy requires discovery within a certain time
These issues make embezzlement a specialized claims problem in commercial crime and fidelity insurance.
Practical example
A bookkeeper diverts company funds into a personal account over many months. The business discovers the loss during an audit. Whether insurance responds depends on the employee-dishonesty or crime wording, the proof of loss, the discovery timing, and any applicable limits or exclusions.
Related Terms
- Employee Dishonesty
- Dishonesty, Disappearance, and Destruction Policy
- Bankers Blanket Bond
- Forgery or Alteration Coverage Form
- Burglary Insurance