Today, we unravel the concept of fidelity bonds and their importance in safeguarding businesses against employee dishonesty. In this handy guide, we’ll cover what fidelity bonds are, how they function, how claims work, and more. Let’s get started!
What is a fidelity bond?
A fidelity bond, also known as an employee dishonesty bond or crime insurance, is a type of business insurance. It helps protect businesses from financial losses caused by their employees. Examples of employee dishonesty include theft, embezzlement, forgery, and illegal funds transfers.
How does a fidelity bond work?
A fidelity bond protects the employer if they experience losses due to employee dishonesty. The bond reimburses the employer for physical and monetary damages.
How Claims Work
If an employer experiences a covered loss due to employee dishonesty, they can file a claim with the insurance company that issued the fidelity bond. The insurance company will investigate the claim and, if valid, compensate the employer for the financial losses incurred.
When is a fidelity bond necessary?
A fidelity bond is necessary for businesses that handle financial transactions, have access to sensitive customer information, or deal with valuable assets. It provides an additional layer of protection against potential risks associated with employee dishonesty, ensuring the financial well-being and reputation of the business.
The following types of businesses may be required to purchase a fidelity bond:
- Financial institutions
- Insurance companies
- Security firms
- Brokerage firms
- Business service providers
What are the top three types of fidelity bonds?
Frequently Asked Questions
What are the two main categories of fidelity bonds?
The two main categories are first-party fidelity bonds and third-party fidelity bonds.
- First-party: Protect employers directly from their employees
- Third-party: Protect employers from those hired on a contractual (not full-time) basis
How much are fidelity bonds?
A fidelity bond typically costs 0.5-2% of the required bond amount. The bond amount will depend on the size of your business, the number of employees you have, and other specific factors. Like insurance coverage, the larger your bond, the more coverage you’ll have for employee dishonesty.
Learn more on our Fidelity Bonds page.
Apply for a Fidelity Bond with ZipBonds
When considering a fidelity bond, consult a reputable insurance provider to ensure you obtain the appropriate coverage for your business needs. Secure your business against employee dishonesty with a fidelity bond today.
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. You can apply on our website or call us at 888-435-4191. We’d be happy to answer any questions you have along the way.