Fidelity bonds belong to the category of surety bonds. They cover a business for losses due to an employee’s dishonesty or theft.
Protects Customers
If your business has employees handling money or other valuable assets, consider getting a fidelity bond to protect against financial loss. There are several types of fidelity bonds, including business service bonds, employee dishonesty bonds, and ERISA (Employee Retirement Income Act) bonds.
Some businesses may need a fidelity bond to fulfill a contract or because of state regulations. Others want the peace of mind it provides their customers and employees. No matter the reason, having this insurance coverage is worth the cost.
Protects Employees
Employee theft and fraud cost businesses billions of dollars each year. While training employees on ethics and encouraging a culture of honesty is the best way to keep this risk at bay, a fidelity bond provides a strong layer of additional protection against financial loss.
For instance, a fidelity bond could reimburse your business if an IT professional steals confidential client information and then uses it to fraudulently bill your company for services they never provided. Similarly, if a healthcare worker steals from a patient during an appointment, a fidelity bond would cover the cost of any treatment your business must provide.
Fidelity bonds are often sold as standalone policies, though they can also be included in a commercial crime policy. It’s essential to understand the differences between a fidelity bond and other types of insurance so that you can help your clients find the right coverage for their needs.
Protects Your Business
Employee dishonesty costs American businesses more than $50 billion a year. Fidelity bonds protect against these losses and help you brand your business trustworthy.
There are several types of fidelity bonds, including business services, ERISA, and blanket bonds. Each bond covers a different risk. For example, a business service bond might cover damage or loss to customers’ property from your employees working at home. On the other hand, an ERISA bond protects your clients’ retirement assets from embezzlement by the managing employee of their company-sponsored pension plan.
While a fidelity bond covers many specific crimes, it does not cover general property or professional liability. Commercial property insurance and commercial crime policies cover these.
Protects the Public
If a business can access customers’ money, property, and personal belongings, it should consider getting a fidelity bond. The bond protects the customer against loss caused by theft committed by the business’s employees. It is essential for businesses like janitorial services, cleaning companies, and HVAC firms that regularly enter customers’ homes or offices.
Fidelity bonds can also help a business set itself apart from competitors by demonstrating that it is reputable and trustworthy. Customers typically require the bonds before they award a contract to a company. Consumers are naturally concerned about allowing strangers into their homes or places of business. A fidelity bond shows that the company is a reputable organization capable of reimbursing customers in the event of employee theft.
You can get fidelity bonds as separate policies or as an addition to a commercial crime insurance policy.
