Fidelity Bond

Fidelity bonds, often termed “employee dishonesty insurance,” provide small businesses a means to protect against financial losses resulting from employee actions that harm the company or its clients. The potential for employee involvement in fraudulent or dishonest activities can pose a significant risk. In a 2022 report by the Association of Certified Fraud Examiners, small businesses experienced a higher median loss of $150,000 due to occupational fraud, surpassing that of larger businesses, which reported a median loss of $138,000.

Fidelity Bond Coverage

Fidelity bonds safeguard your business from financial losses due to deceitful and fraudulent acts committed by employees. Situations where a fidelity bond proves beneficial encompass:

Embezzlement: Unauthorized misappropriation of funds by an employee.
Employee theft of property: Deliberate stealing or misplacement of company assets by a staff member.
Forgery: Falsification or alteration of documents by an employee for deceptive purposes.
Illegal electronic funds transfer: Unauthorized electronic fund transactions by an employee breaching protocols.
Misappropriation: Inappropriate or unauthorized use of funds or resources.
Willful misapplication: Deliberate misuse or mishandling of company funds or assets by an employee.

What Isn’t Covered by a Fidelity Bond

A fidelity bond isn’t a comprehensive small business insurance. It exclusively protects the employer and doesn’t assist the employee.

These bonds differ from commercial property insurance, which safeguards physical assets from incidents like fires, theft, and vandalism. Fidelity bonds don’t cover these property-related issues.

Furthermore, a fidelity bond isn’t synonymous with a surety bond. While a fidelity bond involves two parties, a surety bond involves three: the business, insurer, and the customer requiring the bond. A surety bond ensures that a business fulfills the bond’s terms, covering claims related to incomplete work, poor quality, and instances of theft or fraud.

Types of Fidelity Bonds

Business Services Bonds: Protect your business’s customers from theft or dishonest acts committed by your employees.
Condo and Homeowners Association Bonds: Safeguard against dishonest employees or individuals with access to association funds, including directors and officers.
Employee Dishonesty Bonds: Cover instances of theft involving money, securities, or other properties perpetrated by an individual or group of employees.
ERISA Bonds: Shield against harmful acts by a fiduciary responsible for employee benefit or pension plans.
Non-Profit Organization Bonds: Guard against fraudulent or dishonest actions carried out by employees within non-profit organizations.
Standard Employee Dishonesty Bonds: Address cases of employee fraudulent behavior that leads to financial loss for the company.

Businesses That Benefit From Fidelity Bonds

Contractors, janitorial service, dog sisters, house sitters.
Condo and homeowners associations.
Professional offices, such as dentists and physicians.
Any company with benefits. Pension plans must have fidelity bond protection that is equal to at least 10% of a plan’s total assets.
Non-profits.
Accountants, professional offices, medical services.

Fidelity Bond Cost

Small businesses typically pay a median fidelity bond premium of $88 monthly or $1,055 annually.

The cost of a fidelity bond largely hinges on the policy limit. Higher policy limits incur greater expenses. Additionally, the extent of sensitive data managed by your company and the number of employees with access to that information significantly impact fidelity bond costs.

Fidelity bond policy limits exhibit considerable variability, ranging from as low as $5,000 to as high as $10 million. Statistics reveal that 56% of customers opt for fidelity bonds with a $1 million limit.

Fidelity Bond: Deductible

A deductible refers to the portion subtracted from a claim payment, impacting your overall expenses.

Fidelity bond deductibles range from $10,000 to $150,000, with more prevalent figures at $10,000, $25,000, and $50,000.

Opting for a higher deductible often leads to cost savings when procuring your fidelity bond. However, businesses need to assess these savings against the possibility of receiving a reduced payout in the event of filing a claim.

Do You Need a Fidelity Bond?

Instances that might necessitate a fidelity bond:

A business handling cash or valuable assets regularly may opt for a fidelity bond to protect against employee malfeasance.
Service-based businesses like dog-sitting or janitorial services could benefit from a business service bond, shielding clients in case of employee theft.
Nonprofits or accounting firms might seek a standard employee dishonesty bond to safeguard against internal theft incidents.
For companies managing private sector employee benefit plans, an ERISA bond offers protection in cases of fraud or dishonesty.
Additionally, some situations mandate the purchase of fidelity bonds. States, for instance, might require janitorial service providers to acquire fidelity bonds.
Notary publics are often obligated to obtain notary bonds.

Moreover, clients might stipulate fidelity bonds in contractual agreements, especially in consulting firms. These bonds cover theft, fraud, electronic funds transfers, and unauthorized data access, bolstering trust between businesses and their clients.

Coverage Options to Consider

It is advisable to consider additional coverage options to fully protect your trucking business. These may include:

Inland Marine Insurance

Inland marine insurance is designed to cover goods in transit, making it particularly relevant for dump trucks involved in hauling materials. This coverage protects against damage or loss to the cargo during transportation.

Physical Damage Insurance

This commercial trucking insurance covers the cost of repairing or replacing a dump truck if it is damaged in an accident, regardless of fault. This includes both collision and comprehensive coverage.

Umbrella/Excess Coverage

This particular commercial trucking insurance provides additional liability protection beyond the limits of primary liability insurance, acting as a supplementary layer of coverage with higher limits to protect against catastrophic losses.

Non-trucking Liability Insurance

A commercial trucking insurance provides coverage for these trucks when they are not engaged in business-related activities, such as when the truck is driven for personal use. It offers protection during personal use to fill gaps in coverage that primary liability insurance might not address.

General Liability

Trucking general liability insurance covers bodily injury, property damage, and related liabilities stemming from trucking operations, protecting businesses from legal and financial risks associated with accidents or incidents involving their vehicles.

Rental Reimbursement

Rental reimbursement is an insurance provision that covers the cost of renting a substitute vehicle when your primary vehicle is undergoing repairs due to a covered accident or damage, ensuring uninterrupted mobility during the repair period.

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We specialize in a diverse range of insurance policies tailored for commercial truck drivers and their businesses. Our TRS-certified truck insurance agents are dedicated to curating policies that precisely match your unique requirements while ensuring competitive rates.

Your satisfaction is our top priority, and we are devoted to providing continual support to address any concerns you may have about your policy. Whether you’re launching a new trucking venture or refining your current coverage, our goal is to offer comprehensive protection. With the right insurance coverage, roads aren’t just trade routes; they transform into pathways for success and growth.

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