Fidelity Bonds

What Are Bonds?

Though you can't always control other people's actions, bonds can ensure they don't hurt your business.

Crime and employee dishonesty bonds are the only type of bond that covers dishonest acts of employees. The coverage includes any of the employer's items that the employee takes. Coverage may be provided using either a standard ISO form or a Surety Association Form. Contractors will need this coverage since it includes empoyees stealing from the job site. Also, any contrac

Do Contractors Need Fidelity Bonds?

Contractors will need the coverage provided by crime and employee dishonesty bonds since it includes employees stealing from the job site. Also, any contractor who regularly sends employees to customers' locations may want to purchase coverage for theft of customer's goods.

 

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Overview of Fidelity Bonds

Despite its name, a fidelity bond is a form of insurance and not a financial asset. It may seem strange to purchase insurance for your employees' intentional misdeeds, but high levels of trust can actually increase your risk exposures.

Employees with regular access to financial information, safes, cash registers, or valuables can easily commit fraud, especially if their employers don't consider the possibility of intentional fraud. Fidelity bonds can also protect your business from losses caused by a third-party contractor.

Protect Your Business

How Much Do Fidelity Bonds Cost?

Insurance carriers determine the rate for fidelity bonds based on the amount of coverage, the number of employees included in the policy, and your business's industry. However, rates can also vary depending on the type of fidelity bond that's being purchased.

The Three Main Types of Fidelity Bonds

Insurance carriers generally offer three main types of fidelity bonds:

  • Crime & Employee dishonesty bonds - These bonds protect your business from any financial losses caused by your employees.
  • Business service bonds - Businesses that regularly send employees to their clients' or customers' locations should purchase these bonds to cover any intentional theft or property damage.
  • Employee Retirement Income Security Act (ERISA) bonds - Federal regulations require businesses with retirement plans to purchase ERISA fidelity bonds for employees who manage benefit funds. ERISA bonds must cover at least 10 percent of the funds handled by employees, but businesses should be sure to check their specific regulatory requirements when purchasing coverage.

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Who Should Purchase Fidelity Bonds?

Although almost every workplace has risk exposures related to employee fraud, fidelity bonds are especially important for certain businesses:

  • Many states require businesses to purchase fidelity bond coverage before issuing business licenses.
  • Businesses with retirement and other employee benefit plans need to purchase fidelity bonds to comply with ERISA requirements.
  • Workplaces that allow employees to work near cash registers, safes, and unsecured financial information should consider fidelity bonds, even if they monitor their workforce with cameras or digital IDs.
  • Businesses that send employees to other workplaces or their customers' homes should have them covered under a fidelity bond. These employees frequently have extended and unmonitored access to valuables, making them a large risk exposure.
  • Contractors will need the coverage provided by crime and employee dishonesty bonds to protect against employees stealing from the job site.

 

Make Sure You Have the Right Coverage

What Are Financial Institution Bonds?

Fidelity bonds designed to protect banks are generally referred to as financial institution bonds, or "Bankers Blanket Bond" insurance. This type of insurance protects a firm's balance sheet against fraud. Institutions that provide  financial services to third parties needs to consider some sort of financial institution bond. This includes depository institutions, investment managers, and investment funds.

How Can Businesses Get Bonds?

Your business relies on its employees to conduct your operations and promote success. However, you also need to purchase coverage for all your risks, including employee fraud.

For help purchasing a bond, contact the independent insurance experts at World Insurance Associates. Our agents are familiar with many types of bonds, and they can help you find the right one for your business.

 

Meet Your Industry Specialist

Jeff Deldin original

Jeffrey P. Deldin, CPCU, AFSB

Mr. Deldin is a Partner of World Insurance Associates LLC and the former President of Bruen Deldin DiDio Associates, Inc. based in Brewster, NY. Jeff works with clients in the New England and Mid-Atlantic territory. He began his surety career in 1990 and became a surety bond broker and construction insurance broker in 1995.

Mr. Deldin works on clients' bonding and insurance needs with a focus on the construction industry. He has experience with all lines of construction, including: general contractors, heavy & highway, subcontractors, specialty trades, and environmental risks.

Jeff received his B.S. in Business Finance from the University of Connecticut. He sits on various agency council boards with key insurance carriers. He is involved with local, regional, and national construction trade organizations as well as insurance and bond associations. In addition, the company has been a member of The Associated Builders & Contractors - CT Chapter since 1998. Jeff has also served as a member of the ABC-CT Board of Directors for 12 years.

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