What is Fidelity Insurance?
Fidelity insurance, also known as employee dishonesty coverage, protects businesses against financial losses caused by fraudulent or dishonest acts committed by employees. This can include theft of money, securities, or property. It's commonly part of a commercial crime insurance policy or offered as an endorsement to other business insurance policies.
Who Needs It
Fidelity insurance is important for any business that entrusts employees with access to cash, customer information, inventory, or financial accounts. This includes:
- Retail and service businesses handling cash transactions
- Nonprofits and associations with volunteer or staff treasurers
- Construction firms with employees managing job site materials
- Financial institutions and firms handling client funds
- Businesses required to carry a fidelity bond by contract or law
What It Typically Covers
Fidelity insurance generally covers direct losses resulting from specific acts of employee dishonesty, including:
- Theft of money, securities, or property
- Forgery or alteration of company documents
- Fraudulent fund transfers
- Embezzlement or unlawful data manipulation
The policy may also cover third-party losses if an employee steals from a client or customer while on the job, depending on the coverage chosen.
Common Exclusions and Limitations
Fidelity insurance policies typically do not cover:
- Losses caused by business owners or partners
- Acts committed by employees after their dishonesty is known
- Errors or omissions not involving theft or fraud
- Losses from cybercrime unless specifically included
Make sure to review your policy for specific terms, as coverage details can vary by provider and policy type.
Factors That Influence Cost
The cost of fidelity insurance depends on several factors, including:
- Number of employees and their access to funds or sensitive data
- Business size and industry type
- Existing internal controls and risk management practices
- Policy limits and deductible amounts
Carriers may also consider your claims history and whether bonding is required by contract or regulation.
Proof of Insurance and Compliance
Some clients, contracts, or government agencies may require proof of fidelity coverage, often in the form of a fidelity bond. Requirements vary by state and industry. Be sure your policy meets any specific obligations your business faces. Keeping valid proof of insurance can help maintain compliance and build trust with customers and partners.
How to Get a Quote
Getting fidelity insurance is straightforward. You can get a customized quote based on your business needs, number of employees, and industry risk profile. Get a fidelity insurance quote today.
Frequently Asked Questions
Is fidelity insurance the same as a fidelity bond?
They are similar but not identical. A fidelity bond is a type of fidelity insurance specifically used to meet legal or contractual obligations. Fidelity insurance may refer to broader employee dishonesty coverage.
Does fidelity insurance cover contractors or volunteers?
Most policies cover only direct employees. If you need coverage for contractors or volunteers, you may need to add an endorsement or choose a policy that includes them.
Is fidelity insurance required by law?
Not always. However, some industries or contracts may mandate coverage, especially those involving handling of client funds or sensitive data.
Can I add fidelity coverage to my existing business policy?
Yes, many insurers offer it as an endorsement to a business owner's policy (BOP) or commercial package policy.
What should I do if I suspect employee theft?
Document the issue, notify your insurer promptly, and follow your internal investigation procedures. Your policy will outline reporting and claims requirements.
Still have questions? Talk to a local insurance expert.