How is the total amount of loss defined when calculating insurance payouts under the Employee Theft agreement for ABC, Inc.?

When calculating insurance payouts under the Employee Theft agreement for ABC, Inc., the total amount of loss is defined as the combination of monetary loss and the value of stolen merchandise. This comprehensive approach takes into account all types of losses incurred due to employee dishonesty.

By including both cash and the value of merchandise, this method ensures a more accurate reflection of the actual financial impact on the business. This means that if an employee steals both cash and goods, the total loss for which the insurance company would compensate the insured would encompass both aspects, giving a fuller picture of the damage suffered by the company.

In contrast, approaches that limit the definition of loss to just the value of merchandise or those that ignore losses over certain thresholds do not accurately represent the overall financial impact of theft. Therefore, this understanding leads to more equitable compensation for businesses affected by employee theft.