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Fidelity Bond Insurance

Fidelity bond insurance, also known as commercial dishonesty or employee dishonesty insurance, is a form of business insurance designed to protect employers from the loss of money or property as a result of theft, larceny or embezzlement by their employees. First party fidelity bond insurance covers the employers assets and third party fidelity bond insurance covers the assets of the employer’s clients.

A business can purchase fidelity bond insurance up to a set maximum to protect financial assets, equipment and other property. There is also a fidelity bond insurance program, administered by the federal Department of Labor and Economic Growth (DLEG) Bureau of Workforce Programs, to encourage employers to hire job seekers who might be seen as at higher risk of committing crime because of events in their previous work history.

DLEG offers fidelity bond insurance free to employers for six months for each new high-risk employee, starting on the first day of their employment. Bonds are available from $5,000 to $25,000 in increments of $5000, based on the value of the employer’s property that is at risk. For bonds over $5,000, the employer needs to justify the higher amount. There is no deductible for fidelity bond insurance, so employers are covered for 100% of their loss. After six months the fidelity bond expires, but the employer can purchase continued coverage from a participating insurer.

Fidelity bond insurance does not cover bail bonds or court bonds, liability resulting from work accidents or poor workmanship, or contract bonds, performance bonds or license bonds for self-employed workers.

To apply for fidelity bond insurance offered under the Fidelity Bonding Program an employer needs to send information to the local office, including: a copy of an offer of employment letter on company letterhead; a description of the job with the job title, pay rate and duties; a statement that employment is conditional upon the worker receiving a fidelity bond; assurance that the job is for at least six months and that it is full-time (at least 30 hours per week) and a statement of what size of bond is required, with justification if the amount is larger than $5,000.

Fidelity bond insurance covers business owners and their clients for the loss of money and other assets as a result of employee dishonesty.