Overview of a Fidelity Bond

A fidelity bond is a type of bond that businesses can purchase in order to protect themselves against the negligence or malice of their employees. If an employee's actions end up costing the company money, this type of bond will protect the company and help pay them back.

Fidelity Bonds

Even though a fidelity bond is technically referred to as a bond, it is actually a type of insurance product that companies can buy from insurance companies. This is essentially like an insurance policy that is designed to protect them from losing money as a result of the actions of their employees.

Who Uses It

Many different types of companies could use fidelity bonds to protect themselves. The most common examples of companies that use fidelity bonds are investment brokerages and insurance companies. These companies are in vulnerable positions when it comes to dealing with their employees. Since they have to give their employees access to financial transactions, they are at their mercy without some type of protection. For this reason, they are required to carry fidelity bonds so that they can limit their business liability. The insurance company will step in and reimburse them for damages or losses in this area.

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