What does a fidelity bond protect an employer against?

A fidelity bond is specifically designed to protect employers from losses resulting from dishonesty or fraudulent acts committed by their employees. This type of bond provides financial coverage in cases where an employee embezzles funds, steals property, or engages in other forms of deceitful behavior that could lead to financial harm to the employer.

Fidelity bonds are an important risk management tool for businesses, as they help employers recover losses incurred from such dishonest actions, ensuring that they can maintain financial stability even in the face of employee misconduct. Understanding this coverage helps employers mitigate potential risks associated with trusting employees with sensitive financial information or assets.

Other options such as theft by competitors, natural disasters, and accidental damages are addressed through different types of insurance policies, such as liability insurance or property insurance, rather than a fidelity bond, which is specifically focused on employee-related dishonesty.