Employee Dishonesty Bonds Explained

If you have a business with employees, then you will probably need to obtain an employee dishonesty bond. It is a sad commentary in today’s world that you need liability protection against your very own employees and their potential dishonesty. Yet should an employee engage in embezzlement on your watch, you would be able to file a claim for this and to receive compensation for the damages they did. We look at the particulars of the policy here.

 

Coverage and Cost for These Kinds of Policies

It is difficult to say precisely how much such a policy will run. The costs of these bonds range from one applicant to the next according to the particular kind of coverage, the amount of the bond, and the business controls already in place at your company.

Coverage tends to top out at around a $100,000 limit. Agents will underwrite it according to one of two main forms. With Coverage A, it is produced much like a fidelity bond. The coverage only pertains to employee-committed theft though. This coverage will reimburse for damages or theft of securities, money, or other valuable property that has been compromised by the forgery or theft of one of your covered employees. Since this form of coverage is directly restricted to only theft, premiums for this are usually much less expensive than with fidelity bonds.

The Coverage B type is typically obtained by a service-oriented firm. Janitorial companies, dog walkers/sitters, house sitters, and the like are good examples. Such a policy will cover either the theft or damage of the property of a company client (which is committed by an insured employee). This bond will only pay out compensation against a specific incident once an employee has become convicted and sentenced for their crime by a law court. It means that it is far harder to collect on this second type of policy.

In today’s world, it is a sign of the times that this type of unfaithful employee bond is fast becoming more popular and in demand. It is imperative to ensure that you understand the policy you are buying before hand. They can be quite surprising and challenging to collect on later otherwise.