One type of fidelity bond is used to protect employers from losses due to employee actions. This includes a variety of dishonest actions, such as theft. Here is more information about this type of bond.
What They Are
Dishonesty bonds are a type of insurance. They almost always cover acts of theft, embezzlement, forgery, and destruction of assets caused by employees. They can also protect your business from forged checks, counterfeit currency, fraudulent trading, and property damage. These losses are generally covered, even if the guilty employee cannot be identified.
However, this is not unquestioned coverage, as employers must closely examine their employees’ pasts. This is because these bonds do not cover any acts committed by employees with a history of theft or other acts. While this may seem like a limitation at first, it can make your company seem more reputable from the public’s perspective.
The main benefit of these bonds is that they prevent companies from facing challenges, such as bankruptcy, due to employee dishonesty. This is especially good for businesses with little capital and low-paid employees who have access to clients’ possessions. Without bonds, any employees who go on a stealing spree could escape without justice and force their employer out of business. Additionally, bonds prevent entire segments of the market from being unviable by forcing employees to be accountable.
One drawback of using these bonds is that employers are protected from employee dishonesty, leading to untrustworthy individuals working in a business. Additionally, the protection may encourage employers to ignore the signs of employee dishonesty whenever it is convenient for them.
Fidelity bonds are a great idea to protect businesses. This type specifically protects against employees who commit acts of dishonesty. There are many benefits to this bond. However, employers considering them should also think about the potential drawbacks before deciding if this is the right option.