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Often associated with companies that deal with fiduciary responsibility, they can also be used when there is clear opportunity for theft or fraud.
A fidelity bond is similar to traditional insurance policy protection that protects from losses incurred as a result of fraudulent acts by specific individuals. Fidelity bonds usually insure a business against the dishonest or fraudulent acts of its employees.
It also offers clients assurance that the company they are doing business with has financial wherewithal and protection to offer recovery for fraud or theft.
While called bonds, these obligations are really insurance policies. These policies protect businesses from losses of company monies, securities, and other property from employees who have intent to cause the company a loss.
There are also many other forms of crime-insurance policies (burglary, fire, general theft, computer theft, disappearance, fraud, forgery, etc.) to protect company assets.
However, it is important to note that these bonds are generally only pay out when a conviction is handed down.