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Fidelity Bonds

Businesses need fidelity bonds to protect themselves and their customers from the actions of their employees. Using fidelity bonds allows businesses to guarantee loyalty and honesty from employee misconduct.

What Are Fidelity Bonds?

What Are Fidelity Bonds?

Fidelity bonds are a type of surety bond. This type of protection is a type of insurance that offers protection against company losses that may occur as the result of intentional property, security, or financial loss facilitated by an employee.

How Fidelity Bonds Are Used

Fidelity coverage is used to protect businesses and corporations. Companies often opt to purchase fidelity bonds as a part of their risk management strategies. Fidelity insurance ensures that business entities as well as their partners and customers are protected from harmful actions of dishonest employees.

Who Should Get Fidelity Insurance

Any business with employees should obtain some form of fidelity insurance. While not required by law, fidelity bond insurance provides employers and clients asset protection. Some examples of entities that should get fidelity bond coverage include:


Small businesses


Accountants and financial planners


Non-profit organizations


Consulting firms




Large corporations


Independent contractors


Private and public companies

Types of Fidelity Bonds for Employers

Depending on the type of business and the specific needs or concerns employers have, there are different types of fidelity bonds to choose from with various functions and benefits.


Also known as pension trust bonds or 401(k) fidelity bonds in some cases, ERISA bonds provide insurance on retirement plans and protects these plans and their beneficiaries from fiduciary misconduct. As required by the Employee Retirement Income Security Act of 1974, pension plan trustees must obtain fidelity coverage equal to or exceeding 10% of the assets contained within the retirement plan.

Business Services Bonds

Also called business bonds, business service bonds are among the most common types of fidelity coverage, offering protection for specific businesses and clients. Business bonds specifically apply to work that involves gaining access to client property, including homes and businesses. Obtaining a business service bond can provide assurance that employees will behave ethically and honestly during their work and offer coverage for any damages or losses incurred by their actions. Some businesses that can benefit from business fidelity bonds include:

  • Janitorial services
  • Gardeners and landscapers
  • Catering providers
  • Photographers
  • Locksmiths
  • Cleaning services
  • Painting contractors
  • Pest control services
  • Security professionals
  • Moving companies
  • Home nursing services

Employee Theft and Dishonesty Bonds

This type of fidelity coverage can protect businesses from employee misconduct including fraud and theft that results in company loss. Unlike other bonds, employee theft and dishonesty bonds are often treated more like insurance policies, where employers pay for these bonds to protect their own losses rather than the losses of customers.

Notary Bonds

Fidelity bonds for notaries protects the public from their negligence or dishonesty, granting clients the right to file for reparation if they are victimized.

Commercial Crime Bonds

Crime policies often extend protection beyond employers and employees. Much like employee theft and dishonesty bonds, commercial crime bonds are used to insure businesses against theft, fraud, forgery, robbery, and more.

Fidelity Bonds vs. Fiduciary Insurance

Fidelity Bonds vs. Fiduciary Insurance

While offering similar protections against company losses, there is a key difference between fidelity bonds and fiduciary insurance coverage. Fidelity coverage provides reimbursement for losses that result from the dishonest or malicious acts of an employee.

Fiduciary insurance specifically covers losses resulting from the actions of a fiduciary or other money manager, namely in cases involving mismanagement or contract breaches. Unlike fidelity bonds, fiduciary insurance does not cover theft.

The Difference Between Fidelity and Surety Bonds

A primary difference between fidelity and surety bonds is that surety bonds are often required by law to ensure project completion while fidelity bonds are usually not mandatory.

A fidelity bond is a type of surety bond that specifically protects employers and their clients from employee dishonesty or misconduct. Surety bonds, on the other hand, offer broader protection.

Protections Offered By Fidelity Bonds

Purchasing fidelity coverage for your business ensures you are protected from harmful, dishonest actions of your employees. Fidelity bonds often cover a wide range of employee crimes and actions, including:






Illegal transfer of electronic funds




Unlawful access of data


Identity theft








Social engineering

Fidelity Coverage Options

Your fidelity bonds can take on several forms depending on your specific needs. What type of coverage you choose may vary based on factors such as the size of your company and the assets your company possesses. Common fidelity coverage options include:

Blanket Coverage

Common in larger, well-established businesses, blanket coverage does not identify specific individuals but instead groups employees into designated categories, such as those who handle money or other assets. This type of fidelity coverage protects businesses more broadly from malicious actions taken by employees who fit determined criteria.

Position Coverage

Similar to blanket coverage, a position fidelity policy selectively covers employees who fill designated positions.

Name Coverage

This type of coverage is hyper-specific, covering only named employees who are identified in the policy. Obtaining name bonds, which is sometimes referred to as name schedule bonds, is often more cost-effective and appropriate for smaller businesses.

Floater Coverage

Requiring at least five identified employees to be included in this coverage, a floater fidelity policy insures employers for a set amount.

Best Fidelity Coverage for Employers

Choosing the best fidelity policy for your business can keep your assets, partners, and clients safe. Fidelity bonds come in different forms that have applications depending on the type of employees your business has.

First-Party Bonds

First-party fidelity policies explicitly cover the dishonest and harmful actions of employees directly hired by an employer. These bonds can cover part-time, full-time, and even temporary employees in most cases..

Third-Party Bonds

While third-party bonds also protect businesses from dishonest acts like theft and fraud, these policies specifically offer coverage for individuals who are hired on a contract basis. If your business works with contractors, consultants, or other contract-based employees, third-party fidelity bonds are the way to go.

How to Choose A Fidelity Bond

How to Choose A Fidelity Bond

When deciding on a fidelity bond, you should consider the specific needs, limitations, goals, and concerns of your business. A small business, for example, will likely pursue different fidelity plan options than an independent contractor or a large corporation.

If you have questions about fidelity bonds and want to learn more about which types of coverage will be best for you, contact one of our agents at World Insurance today.

How to Buy Fidelity Bonds with World Insurance

Obtaining fidelity bonds can be a simple process when you choose World Insurance as your provider. Follow the steps below to get started.

Contact A World Insurance Agent

Connecting with an agent at World Insurance is easy. Simply fill out our concise contact form with relevant information; you can expect to hear from one of our skilled agents within a few days. Once you connect with your agent, you can discuss what you need and want out of your fidelity bond policy. If you have any questions about this type of coverage, your agent will be able to help you find the answers you need.


Receive a Quote

Once you have provided your agent with the necessary information regarding your business and what you want out of your fidelity coverage, your agent will provide a quote. The cost of this coverage will vary depending on a number of factors, and if you have budgetary concerns, your agent will help you find the best option for you and your business.


Sign Your Policy Into Effect

When you determine that your fidelity bond coverage quote is agreeable, you can formalize the agreement. At this point, you will have protection from any unlawful or harmful acts of your employees that result in financial loss.

Frequently Asked Questions About Fidelity Bonds

How Much Do Fidelity Bonds Cost?

The cost of your fidelity bonds will depend on various factors including how much coverage you want to have, the number of employees who can access sensitive information or business assets, the financial or personal information your company handles, your desired deductible, your chosen bond limits, and more. The kind of fidelity coverage you choose, as well as the number of employees you want to cover, will also impact how much your bonds will cost.

Who is the Obligee on a Fidelity Bond?

A fidelity bond protects your business from the harmful actions of dishonest employees. Therefore, your business is the obligee.

What is the Difference Between Fidelity Bonds and Crime Insurance?

Fidelity bonds specifically cover crimes and other dishonest behavior committed by employees of a company while commercial crime insurance offers broad coverage for criminal activity that is not necessarily committed by company employees. In most cases, crime insurance will be more costly than fidelity bonds, but both types of coverage offer protection and security.

Does Your Small Business Need A Fidelity Bond?

Fidelity policies provide an extra layer of protection from dishonest employees. Purchasing a fidelity bond can protect you from employee theft, fraud, and forgery, and investing in these policies will also grant you peace of mind and allow you to focus more on your business operations.

Get Started With Your insurance

Contact World Insurance today to make sure all required coverages are in place. We'll help you compare insurance quotes from different insurance providers.


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