Background checks are important, even obligatory when your employees will be handling cash, sensitive information, inventory or working with vulnerable persons. But a background check alone isn’t enough to protect your business from employee theft, fraud and embezzlement. Records sometimes slip through the cracks, people don’t always get caught and sometimes an employee’s situation changes, making them desperate. Without a loss-management / fraud-prevention system and a fidelity surety bond, your business is vulnerable to theft, fraud and potentially massive losses.
What is a Fidelity Surety Bond?
A fidelity surety bond (or simply, fidelity bond) is a guarantee made by the issuer of the fidelity bond to cover any losses suffered by the policyholder due to the dishonesty of a specific person. That usually means that a fidelity bond is taken out by an employer to protect themselves from the fraudulent actions of one or more employees.
Those losses can be monetary or physical, such as jewellery or electronics. Losses can be caused by both upper management and staff alike and a fidelity bond can be used to cover deliberate, accidental and negligent acts of the employee. For employers who hire staff that work with cash, valuables and information that can be used fraudulently, a fidelity surety bond is a must.
How is a Fidelity Surety Bond Different from an Employee Dishonesty Insurance Policy?
Generally, an Employee Dishonesty policy, or Crime Insurance / Fidelity Insurance, will cover losses caused by employees by what’s known in the insurance industry as the 3 Ds:
- Dishonesty
- Disappearance
- Destruction
Employee dishonesty insurance has evolved over the years and can include acts such as credit card and computer fraud, but for comprehensive coverage and protection, often a Crime/Employee dishonesty insurance policy will be packaged together with a fidelity surety bond.
What Types of Fidelity Surety Bonds Are There?
There are two types of fidelity surety bonds:
Blanket Fidelity Bonds
These bonds are recommended for non-profits and companies with a lot of employees and/or high employee turnover. It offers ‘blanket’ coverage meaning that all employees are covered and the limit of the fidelity bond is based on all losses added together (the aggregate amount). New employees are automatically covered, and old ones are automatically removed as soon as they are no longer employed.
Scheduled Fidelity Bonds
A scheduled fidelity bond is recommended for businesses with employees who handle more responsibility, have access to greater sums of money and/or are in positions of trust. A scheduled fidelity bond will only cover employees named in the bond. Each employee is bonded for a specific amount and the limit of liability applies to each name/position listed, or ‘scheduled’, on the bond.
At ALIGNED, We’re Experts at Protecting Your Business Because Commercial Insurance Is All We Do.
If you’d like more information on fidelity surety bonds, contact an ALIGNED advocate who is more than happy to help.
When you choose ALIGNED, you get a commercial insurance specialist advocating for your business to get you comprehensive protection from theft, fraud and loss at affordable rates. We work with Canada’s top insurance and bonding companies to ensure you get reliable protection from your fidelity surety bond. Contact an ALIGNED advocate to get a free quote on a fidelity surety bond in minutes.
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