What Is Fidelity Bond?
Fidelity bond is nothing but an insurance policy that shields against theft or fraud. There are many who confuse it with surety bonds, however, both types of bonds function differently. Unlike surety bonds, fidelity bonds are like insurance. It is for businesses who want to secure from deliberate fraudulent acts of their employees and contractors that can result in huge losses of clients and profit. Remember, fidelity bonds never target on mistakes, errors or oversights. In fact, it targets intentional deceitful acts including embezzlement, dishonesty, and fraud.
How Does Fidelity Bond Work?
As such, this type of bond is not required by law. It is up to businesses whether they want to cover their losses from it or not. It is an insurance product and cannot help you generate interest. Since, fidelity bonds offer safety and establish a trust between business and its customers, many businesses opt for it as a competitor advantage. Hence, there are many good reasons to get a fidelity bond.