An employee dishonesty bond, sometimes called a crime bond, is a fidelity bond that can be purchased by employers as a guarantee that money, securities and property lost due to employee dishonesty can be replaced.

Businesses can be high risk ventures and they often require several kinds of insurance in order to provide adequate protection against financial loss. Employers in particular, face a lot of liability because they entrust part of their business practice to employees, who may or may not turn out to be decent workers.

A dishonest act by an employee is not negligence – it’s intentional. It’s not covered under a liability policy because it’s an act within a business that hurts that same business. However, while this kind of act may hurt the business as a whole, it will generally hurt an employer more than an employee, even though there was a level of trust between the two. This kind of act requires a specific policy to cover losses incurred.

Fidelity bonds are a kind of crime protection insurance that protects employers from some deliberately harmful actions made by their employees, that hurt the business.

There are two kinds of fidelity bonds: third party fidelity bonds and first party fidelity bonds. Both protect businesses against the same kinds of acts committed by people who complete work for the business, but they aren’t the same.

A third party fidelity bond is intended to protect an employer against losses that result from the fraudulent or dishonest actions of contract workers. A first party fidelity bond protects a business against intentional acts, like forgery, theft, or fraud, that are committed by employees.

A fidelity bond is an agreement between an employer and an insurer. The employer takes out a policy on an employee or a group of employees, and the payout is made in the case that the employees cause deliberate harm.

Who Needs a Fidelity Bond? Why?

Generally, insurance companies and brokerage firms, both of which handle large financial responsibilities, are specifically required to carry a fidelity bond at a specific amount, but any business can benefit from one. Any time that an employer has a reason not to trust an employee, or when an employer is entrusting a lot of responsibility, especially financial responsibility, to a specific employee, a fidelity bond can be extremely important.

Do You Need a Fidelity Bond?

Trusting your employees can be a huge leap, and in some cases, it can be quite risky. Sometimes, an employer just needs to be sure that his or her business is protected. If you’re interested in a fidelity bond, reach out to Fusco-Orsini today to learn if one is right for your situation.

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