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So you’ve heard of surety bonds and fidelity bonds, and after reading What is a Surety Bond, Anyway? you’re a surety bond expert. Time to brush up on fidelity bonds.
Recap: Surety Bonds
Before diving into fidelity bonds, here’s a quick refresher on surety bonds:
A surety bond is an agreement between three parties:
- The principal, the person buying the bond
- The obligee, the entity requiring the purchase of the bond
- The surety, the company providing financial backing for the bond
Surety bonds are the principal’s guarantee that they will uphold the terms of their bond. The bond provides customers a way to seek reimbursement if the principal causes them financial damage.
What are fidelity bonds?
Fidelity bonds are more like insurance, because they protect the bondholder from any dishonest or fraudulent actions by certain people, usually the company’s employees. For this reason, fidelity bonds are sometimes called dishonesty bonds.
Usually the person who the bond protects against are those who handle company finances, like an accountant or employees who handle customer transactions. If an employee commits fraud, whether by outright stealing money or merchandise or by embezzling, the fidelity bond offers the bondholder a way to recoup their losses. These bonds are especially useful when employee theft is not covered by the bondholder’s existing insurance policies.�Choosing to purchase a fidelity bond gives your business added protection against employees who intend to do harm to you and your business.
Fidelity bonds can be easily confused with business service or janitorial service bonds—Florida and Alabama are just examples; you can get these bonds in any state. These bonds protect clients from employee theft in professions where employees visit clients’ homes, like housekeeping services or pest control. They function like other surety bonds, as a means of security for customers. It’s important to remember that fidelity bonds are for you and your business’s protection.
Think you might need a fidelity bond or other surety bond? Single Source Insurance can help you get bonded today!