OIG Bulletin, August 2020: Check Your Insurance Coverage

Governing bodies of local jurisdictions should review their policies and oversight regarding their financial functions.

Check Your Jurisdiction's Insurance Coverage

In July 2020, a statewide grand jury indicted the former accountant for three towns for allegedly embezzling more than $729,000.

The governing bodies of local jurisdictions should review the surety bonds or professional liability insurance held for positions with financial responsibilities. Consult with your insurance carrier or broker about the following:

• Is our coverage still active? Is the coverage enough to protect the jurisdiction?
• Does this policy cover both regular employees and contract employees? Does it cover vendors?
• What is the coverage per incident or occurrence? Do the claims aggregate? If so, what is the aggregate limit?
• What type of conduct does the policy cover?
• When can we file a claim?
• Have we met all the conditions of coverage, including an annual financial audit?

It is difficult when a jurisdiction is the victim of a crime perpetrated by an employee. The situation becomes even worse when the jurisdiction is unable to recoup its losses because of lapsed or insufficient insurance coverage.

Additional Resources

Former Accountant for Three Massachusetts Towns Indicted for Stealing $729,000

OIG Bulletin, August 2020, Vol. 1, #3

Red Flags for Fraud