What is Fidelity Bonds Professional Liability?
Fidelity Bonds Professional Liability insurance helps protect businesses and professionals from financial losses due to dishonest acts committed by employees. Unlike general liability coverage, which protects against third-party claims, fidelity bonds focus on internal risks such as theft, fraud, or embezzlement. This type of insurance is especially important for companies that handle sensitive client data or manage financial transactions.
Who Needs It
Fidelity Bonds Professional Liability coverage is valuable for businesses in industries where trust and handling of financial assets are central. This includes:
- Financial advisors and planners
- Accounting and bookkeeping firms
- Real estate and property management companies
- IT service providers with access to sensitive data
- Legal professionals and law firms
Any organization that could suffer a financial loss due to an employee’s dishonest actions should consider this coverage.
What It Typically Covers
This insurance generally provides protection against:
- Employee theft of money, securities, or property
- Forgery or alteration of documents
- Computer fraud by insiders
- Funds transfer fraud
- Embezzlement or misuse of company assets
Coverage can vary by provider, so it’s important to review the terms and limits of your policy.
Common Exclusions and Limitations
Fidelity Bonds Professional Liability policies often exclude:
- Acts committed by company owners or partners
- Losses not reported within a specific time frame
- Third-party criminal acts (unless added via endorsement)
- Losses due to poor business decisions or negligence
Review your policy carefully to understand what is and isn’t covered.
Factors That Influence Cost
Several factors can affect the cost of a fidelity bond policy, including:
- Size of your business and number of employees
- Industry and level of financial risk
- History of past claims or losses
- Coverage limits and deductibles
- Internal controls and fraud prevention measures
Each insurer may weigh these factors differently when calculating premiums.
Proof of Insurance and Compliance
Some clients or contracts may require you to carry fidelity bond coverage as proof of financial responsibility. In certain industries, regulators may also expect or recommend this type of protection. Requirements can vary by state and sector, so it’s important to understand the expectations in your specific area.
How to Get a Quote
Getting covered is simple. Answer a few questions about your business to receive a personalized quote. Get a fidelity bond quote today.
Frequently Asked Questions
What is the difference between a fidelity bond and professional liability insurance?
A fidelity bond protects against employee dishonesty, while professional liability insurance covers errors or negligence in your professional services.
Is a fidelity bond required by law?
Not always. However, some industries or contracts may require it as part of compliance or risk management practices.
Are independent contractors covered under a fidelity bond?
Typically, fidelity bonds cover employees only. Coverage for contractors may require a policy endorsement or separate arrangement.
How long does a fidelity bond last?
Most fidelity bonds are issued for one-year terms but can be renewed annually.
Can I add additional coverage to my fidelity bond policy?
Yes, many insurers offer endorsements to expand coverage, such as including third-party losses or computer fraud.
Still have questions? Talk to a local insurance expert.