Finschool By 5paisa

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A fidelity bond is a type of commercial insurance that protects a company from losses brought on by the dishonest or fraudulent behaviour of its employees. This type of insurance also referred to as an “honesty bond,” can guard against monetary or tangible damages. A fidelity bond is also known as employee dishonesty insurance in Australia and fidelity guarantee insurance in the U.K. Companies whose policies include fidelity bonds are shielded from employee wrongdoing by insurance plans.

Bonds issued by Fidelity are not trading securities. This type of insurance is regarded as a part of a business’s risk management plan. In addition to the specific employee or employees who did the act, if a corporation employs employees who conduct fraud, the company may also be subject to legal or financial consequences. As a result, businesses, especially those with a high number of employees, run the danger of receiving such penalties.

Firms are covered for these damages by fidelity bonds. Although fidelity bonds are referred to as “bonds,” they are essentially a type of insurance coverage Fidelity bonds can be viewed as a component of an organization’s enterprise risk management strategy. These insurance plans serve as a kind of defense should the business sustain damages brought on by dishonest or illegal employee acts against it or its clients.

This can apply to employee theft from a company client as well as cash thefts from the business. This kind of policy may also include employee forgeries that have an impact on the company. Fidelity bonds also provide coverage for theft from and break-ins into the company safe, damage to company property, and money transfers that are not authorized.


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