Fidelity Bonds

A fidelity bond, also known as an employee dishonesty insurance or honesty bond, is a type of insurance that protects businesses from financial losses resulting from the fraudulent or dishonest acts of their employees. It acts as a safety net, reimbursing the business for losses incurred due to employee actions such as:

• Theft of money or property
• Embezzlement
• Forgery
• Fraudulent expense claims
• Misappropriation of funds
• Computer fraud
• Willful destruction of property

Who needs fidelity bonds?

While any business can benefit from having a fidelity bond, it's particularly important for those that:

• Handle large sums of money or valuable assets
• Have employees in positions of trust, such as cashiers, bookkeepers, or sales representatives
• Operate in industries with high risks of fraud, such as retail, finance, or healthcare

Types of fidelity bonds:

There are two main types of fidelity bonds:

• First-party: This type covers the business for losses directly incurred due to employee dishonesty.
• Third-party: This type covers the business for losses it is liable for to third parties due to employee dishonesty, such as theft from a customer.

Benefits of having a fidelity bond:

• Financial protection: Reimburses the business for covered losses, mitigating the financial impact of employee dishonesty.
• Peace of mind: Knowing you have coverage can provide peace of mind and allow you to focus on running your business.
• Improved risk management: Demonstrates a commitment to risk management and can help attract investors and partners.
• Potential discounts: Some businesses may qualify for premium discounts based on their security measures and claims history.

Remember: Fidelity bonds typically have exclusions, so it's crucial to thoroughly read and understand the policy before purchasing. The cost of a fidelity bond depends on various factors like the business size, industry, and coverage amount. Consulting with an insurance professional can help you determine the right type and amount of coverage for your specific needs.