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What is a Fidelity Bond
Commercial Crime and Employee Dishonesty Bonds
Fidelity Bonds are often associated with companies that deal with fiduciary responsibility but can also be used when there is a clear opportunity for theft or fraud by an employee. A fidelity bond is similar to traditional insurance policy protection that protects company owners from losses incurred as a result of fraudulent acts by specific individuals. Fidelity bonds usually ensure a business against the dishonest or fraudulent acts of its employees.
They also offer clients assurance that the company they are doing business with has the financial wherewithal and protection to offer recovery for any fraud or theft that may occur while doing business with said company. While known as “bonds” the obligations agreed upon are really seen as insurance policies. These policies protect businesses from losses of company monies, securities, and other property from employees who have the 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 paid out when a conviction is handed down.
FAQs about Fidelity Bonds
Who usually needs to obtain a fidelity bond?Employers who see potential risk in hiring certain employees may seek a fidelity bond. Also, employers who are looking to protect an employee benefit plan may also want to obtain a fidelity bond to ensure protection from dishonest or fraudulent employees. The fidelity bond is another form of insurance that is meant to protect the owner of a business.
How much are fidelity bonds?This bond has a minimum of $1,000 with a maximum $500,000 bond value. The bond needs to cover at least 10% of the assets you are trying to protect. Your premium may range based on your personal credit, financial history, and your current bond status. Your surety can decipher what bond coverage you need and the total cost for you.
Why are fidelity bonds used by employers?Fidelity bonds are considered risk management when owning a company of any size. The bond will cover theft by an employee from the business itself or from customers of the company. From monetary theft to forgery, the fidelity bond can protect the owner from loss. Fidelity bonds can be tailored to fit specific industries or companies based on the services they may provide to clients.
What is an example of when a fidelity bond is needed?Let's say you own a pool company and you send technicians out to care for your clients' pools. If one of your technicians takes this as an opportunity to steal from the client or purposely cause damage to the client's property, a claim against the fidelity bond could be made to pay for damage or loss on your customer's behalf and ensure that your company isn't hindered by the acts of a dishonest tech.
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Fidelity Bond Requirements for ERISA
Some businesses may be required to obtain an ERISA fidelity bond (Employee Retirement Income Security) to protect the companies retirement plan assets. If an employee were to gain access to certain assets within the company and use it as an opportunity to move money around fraudulently, the ERISA fidelity bond would protect the business from any loss caused by the dishonest employee. Anyone who handles assets within the employee benefit plan for any company may be required to be bonded. ERISA have bonding requirements based on regulations set in 1974 and can be referenced in ERISA section 412.
National Surety and Bonding Account Management Group
The Surety Place, previously known as Surety Placement Services, was founded in 2002 with a goal to bring innovation and a high level of service the industry had not yet seen. As an industry leader from the start, we are a people first surety bond partner that you can trust, offering access to agents and businesses to achieve the right solution at the right time.
A People First Company
We establish a relationship with you in order to truly understand your business focus whether large or small, complicated or difficult. As one of the only true specialists within the industry we supply access, partnerships and specialty programs with numerous “A” rated sureties across the nation. We are here to help you service all your bonding needs with no appointments or contracts necessary.
Because of our industry knowledge and expertise coupled with our ever increasing specialty programs, we have the unique ability to write your bonds when no one else can, and because of our relationship with you we will stand behind you in support to achieve your agency or business objectives.
over 50 years of combined surety experience
Our dedicated account managers are highly trained underwriters who provide our agents and clients a tailored bonding solution for their individual or corporate needs. In today’s marketplace, surety access can be limited; but with Surety Place as your partner, you’ll find the white-glove service you have been looking for.
No matter the size of the bond or how complicated, Surety Place is built to find an answer. Poor credit, financial hardship, fast growth, or just getting your company off the ground? We have options for you too.
We understand business. We also understand how difficult it can be when something that seems like such a small piece of the puzzle gets in the way of closing the deal or moving forward. We take that pressure off your mind so YOU can get back to work.
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