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Fidelity Bond

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A fidelity bond is insurance against the possibility that a crime of fraud will occur involving specific entities. Most fidelity bonds are issued to companies that are trying to protect themselves from their own employees. According to the Association of Certified Fraud Examiners, a typical business will lose approximately six percent of annual revenue due to employee fraud. With a fidelity bond, companies will be covered against theft, forgery, computer fraud, embezzlement, and more. Due to the nature of this type of bond, they are often called crime insurance.

The cost of a fidelity bond will vary greatly. The rate is determined by the size of the business, the number of employees, the location of the business, the type of business it is, and the type and amount of coverage desired. For larger policies, businesses are typically required to submit business finances for review, while smaller companies may be required to submit personal financial records, as well.

If a business cannot secure its own commercial fidelity bond, there is a Federal Bonding Program available. Through the federal program, a business can receive a fidelity bond as an incentive to hire a person for a job that may be considered a risk. A person with a criminal record, or another "at risk" potential employee, like someone with a poor credit history, or someone with a history of substance abuse, may then become more attractive to an employer who will not have to worry about taking a financial blow if the employee turns out to be dishonest. A bond can be requested by either an employer, or employee to be. The basic coverage amount is $5,000, but could be larger, if deemed necessary. The start date for the job will be the effective date of the bond.

The federal program is incredibly beneficial to those individuals with existing criminal histories. Commercial fidelity bonds do not cover anyone with a criminal record, and will deem them to be "not bondable." Thus, the federal program offers an at risk person the same opportunities of employment by making then bondable for a potential position. After six months of demonstrated skill and honesty practice, the worker can either have the bond renewed, or can become "bondable for life", through a commercial bonding company.

The fidelity bond protects employers from risk of loss or credibility damage, while allowing business owners the opportunity to grow, and providing those in need of a little assistance with the tools to help themselves.

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