Employee dishonesty can inflict sudden, severe loss. A fidelity bond is a form of insurance that reimburses an employer for loss of money or property caused by fraudulent or dishonest acts of employees. Despite the name, it functions as an insurance policy rather than a traditional surety bond.

Coverage may be written on a blanket basis for all employees or scheduled for named individuals. Limits apply per loss and sometimes per employee. Discovery coverage protects against losses discovered during the policy period even if the acts occurred earlier, subject to a retroactive limitation.

Financial institutions, governments, and commercial businesses all buy fidelity coverage. Applications and underwriting examine internal controls, audit practices, and prior loss history. Prompt notice after discovery of a loss is a typical condition. The bond is a key component of crime-insurance programs.

• Coverage for loss from employee dishonesty
• May be blanket or scheduled
• Often includes discovery-period protection
• Underwritten on internal controls and history