Fidelity Guarantee Insurance in the UAE

Fidelity Guarantee Insurance may cover an insured business against eligible direct financial loss caused by specified dishonest or fraudulent acts committed by an insured employee during the course of employment. Such acts may include theft, embezzlement, forgery, larceny or fraudulent conversion of money or goods.

Cover depends on the employee and dishonest act falling within the definitions in the issued policy. The loss must also be discovered and reported within the applicable period. All claims remain subject to the policy schedule, limits, deductibles, conditions and exclusions.

What Fidelity Guarantee Insurance May Cover

Depending on the issued policy, eligible direct financial loss may involve:

1. Theft or embezzlement: Dishonest taking or misappropriation of the insured business’s money by an insured employee.
2. Fraudulent conversion: Dishonest conversion of money, stock or goods entrusted to an insured employee.
3. Forgery: Direct financial loss resulting from specified forged documents or instruments created or altered by an insured employee.
4. Misappropriation of goods: Dishonest removal or conversion of insured stock or property by an employee.
5. Multiple dishonest acts: Related acts may be treated as one loss, subject to the applicable policy limit and deductible.

The policy generally responds to the insured business’s direct financial loss. It does not automatically cover reputational damage, lost income, customer claims, contractual penalties or every cost associated with investigating the incident.

Who May Need Fidelity Guarantee Insurance?

This insurance may be relevant to businesses whose employees:

1. Handle cash, cheques or other financial instruments.
2. Have access to bank accounts or payment instructions.
3. Manage stock, goods, equipment or valuable property.
4. Process refunds, collections or customer payments.
5. Maintain financial records or accounting systems.
6. Hold positions of financial trust or approval authority.

Important Policy Conditions

1. Employee definition: Cover applies only to persons who meet the policy definition of an employee. Directors, partners, consultants, temporary workers and outsourced staff may require specific inclusion.
2. Discovery period: The dishonest act must normally be discovered during the policy period or an agreed additional discovery period.
3. Prompt notification: Suspected employee dishonesty should be reported within the time required by the policy.
4. Termination of cover: Cover for an employee may end when the insured becomes aware of that employee’s previous dishonest conduct.
5. Proof of loss: The insured may need to establish the amount, cause and circumstances of the direct financial loss.
6. Internal controls: Agreed accounting, reconciliation, supervision and approval procedures should be maintained.

Internal Controls and Risk Management

Fidelity Guarantee Insurance does not replace suitable financial controls. Businesses should consider segregation of duties, dual approvals, regular account reconciliation, stock checks, access restrictions and independent audits.

Employee screening, leave rotation, transaction monitoring and prompt investigation of irregularities may also help reduce the risk of dishonest activity. Material weaknesses or changes in controls should be disclosed when requested by the insurer.

Relationship with Other Insurance

Fidelity Guarantee Insurance is different from Money Insurance. Money Insurance may cover eligible loss of money caused by external theft, robbery or burglary while in transit, on the premises or secured in an approved safe. Fidelity Guarantee Insurance addresses specified dishonest acts by insured employees.

Cyberattacks, fraudulent emails, social-engineering scams, unauthorised electronic transfers and system manipulation are not automatically covered. These exposures may require separate Cyber Insurance or Computer Crime Insurance.

Common Exclusions and Limitations

The policy may exclude or restrict:

1. Known dishonesty: Acts committed after the insured became aware of an employee’s dishonest conduct.
2. Unexplained shortages: Inventory or cash shortages that cannot be linked to an identifiable dishonest act.
3. Accounting errors: Bookkeeping mistakes, calculation errors or ordinary operational losses.
4. Indirect loss: Loss of profit, business, interest, reputation or opportunity.
5. Cyber and social engineering: Electronic fraud or deception not expressly included in the policy.
6. Persons outside the employee definition: Dishonest acts by customers, suppliers, directors or contractors unless specifically covered.
7. Fines and penalties: Regulatory fines, contractual penalties and punitive damages.
8. Excluded events: War, sanctions, deliberate acts by the insured and other exclusions stated in the policy.

What to Do After Discovering a Loss

1. Take reasonable steps to prevent further financial loss.
2. Notify Al Buhaira Insurance as soon as reasonably possible.
3. Preserve financial records, access logs and other evidence.
4. Follow appropriate internal investigation and employment procedures.
5. Report suspected criminal conduct to the relevant authority where appropriate.
6. Protect recovery rights against the employee and other responsible parties.
7. Do not agree to a settlement without prior insurer approval.

How to Request a Quotation

Businesses can submit initial details through Al Buhaira Insurance’s dedicated Fidelity Guarantee Insurance quotation page. The assessment may consider the number and duties of employees, money and stock handled, financial authorities, internal controls, audit procedures, requested limits and claims history.

A quotation does not confirm that insurance has started. Cover begins only after the required information has been reviewed, the offered terms have been accepted and the applicable policy documents have been issued.

Documents Required

The insurer may request documents and information such as:

1. Completed proposal or quotation form
2. Trade licence and company details
3. Employee schedule and job descriptions
4. Employee categories requiring cover
5. Maximum money or goods handled by employees
6. Financial-authority and approval limits
7. Accounting and reconciliation procedures
8. Internal and external audit arrangements
9. Employee screening and reference-check procedures
10. Stock-control and access-control procedures
11. Requested policy limits and deductibles
12. Previous insurance details and claims history

Why Choose Al Buhaira Insurance?

1. Miscellaneous insurance range: Fidelity Guarantee Insurance is available within Al Buhaira Insurance’s miscellaneous insurance products.
2. Dedicated quotation page: Businesses can submit initial employee, control and exposure details online.
3. Risk-based assessment: Quotations can consider employee duties, financial authorities, internal controls and requested limits.
4. Policy and claims enquiries: Customers can contact Al Buhaira Insurance regarding issued terms or a discovered loss under an existing policy.

Frequently Asked Questions