As a business owner, you have to get your employees bonded. If they do not adhere to the business policies and break them, you will be liable for their mistakes. Business services fidelity bonds are there to help businesses protect themselves from such circumstances.
In the case of a bond or pledge, an individual or organization pledges or offers some form of property to guarantee the performance of an obligation or acts. The person who has made this pledge is called a surety, and the property given by the surety is known as security.
Read on to understand a fidelity bond and why you should use it.
What is a Business Services Fidelity Bond?
Business services fidelity bonds are a type of insurance taken by businesses to be protected from any losses they may suffer from the wrongful acts committed by their employees. The coverage is also known as Crime Protection Insurance and guarantees the financial reliability of the business.
It protects your customers from any losses they might suffer from your employees. These bonds are used extensively by businesses that are concerned for their customers and want to ensure their trustworthiness.
The coverage does not protect against the business owner’s dishonest acts, but it does tend to cover those committed by other people.
If an employee or worker causes a loss to the business, this bond ensures that the employer will be repaid indemnity.
Benefits of Business Fidelity Bonds
According to statistics, 42.7 percent of inventory loss in US stores is caused by employee theft.
Here are the reasons to get a fidelity bond for your business:
Prevents the Business from Liability in case of Fraud
Employees sometimes go to extreme lengths to test their employers’ trustworthiness. Fidelity bonds offer protection against such scenarios and ensure that the company does not suffer losses because of an employee’s mistake or wrongdoing.
Ideal for Hire
When you are hiring people, this bond is an ideal way to increase the trustworthiness of your business. It reduces the risk of financial loss on the part of your employer in case your employees act irresponsibly.
The coverage can even help you attract better talent and develop a professional company with strong values.
Protection against the Acts of its Associates
The coverage will protect you against the wrongful acts of your employees and associates, which may complicate matters for your business.
For example, if a relative or friend of an employee helps him commit a crime such as money laundering, this bond shall cover all these losses so that you do not have to suffer.
Helps Maintain the Integrity of the Business
Businesses are expected to conduct their activities ethically at all times, and this bond helps reinforce those values by ensuring that employees do not act unlawfully for their profit.
These bonds also help businesses work within the parameters of government regulations to avoid any mishaps.
Prevents Loss of Assets or Money
The bond helps businesses maintain the integrity and reputation of their operations and ensures that they do not suffer losses if employees make a mistake while handling their business transactions.
The coverage can also protect against errors made by employees while doing business with third parties to ensure the safety of their assets and money.
Prevents Loss of Business Reputation
Crime Protection Insurance can help prevent your business from suffering losses from employees’ criminal activities. The bond operates like an insurance policy for businesses to provide compensation if they suffer any financial loss because of the employees’ wrongdoings.
Fidelity bonds are one of the best ways to maintain a good business reputation and protect your business from losses.
Protects against Inefficient Operations
Fidelity bonds help businesses assure their customers that they will not suffer any financial loss due to employees’ illegal activities and help prevent inefficient operations if an employee turns out to be dishonest.
The bond is an ideal way to protect your business against any losses caused by unethical behavior of employees, whether they are genuine mistakes or willful misconduct.
Keeps your Business Reputation Intact
As an employer, you need to ensure that your employees adhere to the highest standards to protect your business reputation. Experts recommend getting a fidelity bond for up to 10 percent of the total liability limits if a loss occurs during a transaction.
The coverage can also help boost your credibility and maintain your business reputation as a trustworthy service provider.
Businesses need the help of insurance providers to ensure that they can keep their financial losses and compensation costs low in case any unethical behavior occurs among employees.
With the help of fidelity bonds, businesses can assure customers and clients alike that an employee’s wrongful acts will not lead to any losses caused by their operations.