You finish a job, lock up, and go home. Two hours later, the client calls, hysterical. “My engagement ring was on the nightstand, and now it’s gone. You were the only one here.” You didn’t take it, but she files a police report and demands $15,000. You call your General Liability insurer, and they say, “We don’t cover theft. You needed a Bond.”
Key Takeaways
- Liability vs. Crime: General Liability covers accidental damage. It never covers intentional acts like theft.
- The Surety Bond Myth: A “Janitorial Bond” or “Dishonesty Bond” covers you if you are convicted of the crime. If you are innocent (but the client still sues/demands money), the bond pays nothing.
- Third-Party Crime Insurance: This is the coverage you actually want. It defends you against the accusation and pays the client if theft is proven, often without requiring a criminal conviction first.
- Background Checks: If you didn’t background check your employee who is accused, the bond is void.
The “Why” (The Trap): The “Bonded and Insured” Lie
Marketing yourself as “Bonded and Insured” is standard, but most people don’t know what it means.
A Surety Bond is not insurance for you. It is a guarantee to the public. If your employee steals, the bonding company pays the client, and then comes after you to pay them back. It does not protect your assets; it protects the client.
Furthermore, bonds typically require a criminal conviction to pay out. In many “he-said-she-said” cases (like the ring scenario), the police won’t find enough evidence to arrest anyone. The client is still angry, and the bond is useless because there is no conviction.
The Investigation: Theft Coverage Options
I looked at the three ways to handle theft accusations.
1. The Basic Surety Bond (Janitorial Bond)
- My Analysis: Costs $100/year.
- The Reality: Good for marketing. Useless for defense. If you are innocent, it does nothing to stop the client from bad-mouthing you.
2. Service Line / Third-Party Crime Insurance (Travelers)
- My Analysis: This is real insurance.
- The Benefit: It includes “Defense Costs.” If the client sues you for the ring, this policy pays for the lawyer to prove you didn’t take it.
- The Trigger: It covers “alleged” theft of client property.
3. Employee Dishonesty Rider
- My Analysis: Often added to a Business Owners Policy (BOP).
- The Limit: Usually
10k−10k−25k. Ensure it covers “Client’s Property,” not just your own office cash.
Comparison Table: Theft Protection
| Product | Pays Client When? | Defends You? | Cost |
| Surety Bond | Upon Conviction | No | $100/yr |
| Crime Insurance | Upon Proof of Loss | Yes | $300/yr |
| General Liability | Never | No | N/A |
[IMAGE: Screenshot of a ‘Third Party Crime’ endorsement clause]
Step-by-Step Action Plan
- Don’t Admit Guilt: Do not say “I’m sorry” or offer to pay “just to make it go away.” That is an admission of guilt.
- Invoke the Background Check: Immediately send the client the background check report of the employee who was on site. This shows due diligence.
- Upgrade to “Service Line” Coverage: Call your broker and swap your cheap Bond for actual “Third Party Crime” insurance.
- Policy for Valuables: Your contract needs a “Valuables Clause”: “Client agrees to secure all jewelry, cash, and firearms prior to service. Contractor is not liable for unsecured valuables.”
FAQ Section
What if the ring turns up later?
This happens 50% of the time. If you already paid them, good luck getting it back. This is why you wait for the police investigation.
Does my bond cover me if I (the owner) steal?
No. Bonds cover employees. Owners are generally excluded because you can’t insure yourself against your own intentional crimes.
Can the client sue me if I pass a polygraph?
Yes. Civil court has a lower burden of proof than criminal court. That’s why you need Defense coverage.