What Is a Fidelity Bond and How Do I Get One?

Fidelity Bond - What Is a Fidelity Bond? - Buildings in Blue Background

What Is a Fidelity Bond?

A fidelity bond is a form of insurance taken out by an individual or company to protect against the risk of loss due to fraud. Fidelity bonds are used in a wide range of industries, from banking and finance to healthcare and medical research. 

This type of coverage can be invaluable if you are running a small business and employ only one person, but what about large corporations? Large organizations also need to worry about these things happening, so it’s important for them to have this protection in place as well.

The cost for the bond varies depending on what type you want, but can be as low as $200 with most being between $500-$1,000. In order to obtain this bond, an applicant must submit fingerprints and undergo a criminal background check. 

Once approved they will receive their own personal identification number that allows them access to your account so they can help monitor transactions. 

What is a business service bond?

A business service bond is a type of financial instrument that can be used for many purposes, such as securing the performance of agreements, guaranteeing an indemnity, or fulfilling legal obligations. Basically, it’s like an insurance for businesses

Businesses that provide services to their customers often need some type of bond protection. This is because the customer always has something at stake, even if they do not pay upfront for the service. 

The most common types of bonds are performance bonds and payment bonds. Performance bonds protect businesses from nonpayment by guaranteeing that they will be paid for their services in case a customer doesn’t fulfill his or her side of the bargain. 

Payment Bonds provide security against non-competition from a former employee who might have been privy to sensitive information about your company’s operations or trade secrets before leaving your firm. 

 A company’s creditworthiness and financial standing determine what kind of business service bonds they can offer, with higher limits on more prestigious companies.  There are many different kinds such as bid bonds, performance bonds, labor and materials contracts (BLMC), bonding against public work (BAPW), and others depending on your needs and industry.

Why is a fidelity bond needed?

A fidelity bond is a form of surety that guarantees the honesty and integrity of an employee. A fidelity bond protects against fraud, theft, embezzlement, or other financial misconduct by an employee while on the job. Fidelity bonds are required in many industries to protect employers from losses due to dishonest employees.  

A fidelity bond can be used to secure a contract or as collateral for a loan. Fidelity bonds protect against losses from employee dishonesty and theft by ensuring that organizations have sufficient funds to cover their responsibilities in case something goes wrong.  

The cost of these bonds varies depending on the size of the company and its complexity level, but typically ranges from $5,000-$500,000 per year.  In order for an organization to get bonded, it must first provide evidence that it meets all required bonding laws set forth by each state in which it operates. 

How can I get a fidelity bond?

A fidelity bond is a type of insurance that protects against losses due to fraud, dishonesty or other dishonest acts. This coverage is also known as “employee theft.” The amount you can get varies based on the size and location of your business. 

For example, if you have less than $500,000 in assets and operate out of your home with no employees then it might be cheaper for you to go with an individual policy through an insurance company.

So how do you go about getting one? It starts by deciding what type of bond is most appropriate for your needs- either indemnity or surety. Once that is determined then choose the amount, coverage period, and any additional requirements such as collateral from the list of providers on our website.

What is an ERISA Bond?

ERISA bonds are a type of bond that is used to help protect an employer from bankruptcy. ERISA stands for Employee Retirement Income Security Act and this type of bond is created to provide protection for the retirees in the event of a company going bankrupt. 

With increasing numbers of people retiring, many companies have been feeling pressure on their bottom line which has led them to consider bankruptcy as a possible solution. In order to protect against this possibility, employers can create a form of insurance policy by using ERISA bonds. 

These bonds will cover at least 50% or more depending on the terms agreed upon with the insurer and any other collateral that may be offered up by the employer or its subsidiaries if they go under. 

 

Interested? Learn more by checking out Alpha Surety Bonds!