The Importance Of The Fidelity Bond For Employers And Commercial Establishments
As someone, who works closely with clients and customers in the financial sector, you are truly placed under an immense amount of pressure on a daily basis. Dealing with finances and money can be very frightening and requires a lot of responsibility and diligence. If a mistake is made, someone is most likely going to lose a substantial amount of money and this problem could negatively impact you and your company. This is why it is absolutely pertinent to obtain a worthwhile fidelity bond. What is this type of commercial bonding in place and how can it help employers and other commercial establishments? Within this guide, you will be able to find out!
What Does It Do?
In many cases, the fidelity bond will be a requirement. This is generally true for companies, which manage finances and money for other individuals. Some clients will require your business to obtain the fidelity bond, before they’ll enter into a contract with your company. Although it has many purposes, this bond basically confirms that your company will behave in a professional, reliable and trustworthy manner, when dealing with the client’s valuables, possessions and money.
Protects The Business
Although the bond helps to provide your clients and customers with added reassurance, it can also protect your business immensely. This bond is sometimes referred to as an Employee Dishonesty Bond and may also be called a Commercial Dishonesty Bond. In this sense, the bond protects your company from the wrongdoings of your employees.
If your employee happens to steal money or other valuables from the client’s premises,
the bond will protect and insure your business. The bond can also be protective and beneficial in a digital sense. If one of your employees accesses your client’s system and illegally transfers money to an outside account, the bond would protect your business. Generally, the fidelity bond will provide you with adequate compensation, so you can repay the client for the loss.
With this in mind, this bond is immensely important for all sides of the arrangement.
Now, you should realize that there are actually two individualistic types of fidelity bonds. The client usually requires one type, while the other type is only beneficial for you and your business. Below, you will be able to better familiarize yourself with both types of fidelity bonds.
- 3rd Party Fidelity Bonds – This is the type of bond, which is generally required by your client. The bond can be requested regardless of the type of business activity that your company engages in. In fact, some IT professionals will be required to obtain a fidelity bond, before they’ll be allow to secure a contract. The 3rd party bond protects your client in the event that one of your employees steals from the client.
- 1st Party Fidelity Bonds – Although 1st party fidelity bonds are not always required, many companies will still want to obtain one! This type of bond is capable of protecting your business in the event that one of your employees steals money or other valuables from your business property or properties. Traditional property insurance will not cover employee theft, so obtaining this coverage is generally very wise.
When it comes down to it, both types of bonds are immensely beneficial and most companies will want to obtain both. By obtaining a 1st and 3rd party fidelity bond, you will be able to protect your company and your clients, while worrying less about devious employees.
How Much Does A Fidelity Bond Cost?
Before moving ahead, you should attempt to figure out precisely how much your bond will cost. The truth of the matter is that the reassurance provided by the bond will be well
worth whatever cost you are forced to pay. At the same time, you should realize that the cost could vary substantially for each individualistic business. A handful of variables will be considered, when the surety company attempts to formulate a quote for your premium.
First and foremost, the type of business you’re operating will play a vital role in this determination. If your business is more risky and works constantly with money and other valuables, you’ll likely be required to pay a bit more. Other important factors include the coverage obtained, your desired limits and your business’s employee count. The surety company will analyze and utilize each of these factors, in order to come to a definite cost for you and your business.
When You Should Obtain A 3rd-Party Fidelity Bond
When attempting to figure out, whether or not you will need to obtain a third-party fidelity bond, you shouldn’t need to look far. In fact, you will generally just need to speak with your potential client. This company or individual will almost certainly request that you obtain the coverage, before they agree to enter into business with you and your company. Some business types, such as IT professionals, will not face this requirement as frequently as others, but the necessity could be present from time to time.
This will normally be the case, if your duty is going to put you in direct control over the client’s equipment, networks or money. If you are going to be required to manage these assets, you will most likely need to obtain the fidelity bond. Of course, speaking with the client directly can help to clear up any uncertainties.
How To Obtain A Fidelity Bond
If you’re sick and tired of worrying about the trustworthiness of your employees and wish to protect your clients to the fullest, it is time to obtain a fidelity bond. The good news is that obtaining this type of bond is fairly simplistic and most business owners will be able to complete the process online. Just fill out the associated online application and submit it to the surety company. After a short period of time, you will be provided with a quote, which you may choose to accept or refuse. If you agree to the price in question, you can pay the initial premium, sign the necessary documents and obtain your bond, within a few days!
Other Types of Commercial Surety Bonds we provide:
- Auto Dealer Bond – Used in the automobile industry for dealerships.
- Janitorial Bond – Janitorial companies use this bond to protect the client’s interest.
- Utility Bond – Protects Utility companies from defaults from clients.
- Customs Bond – Required by the Federal government of Canada for brokers.
- Medical and Medicaid Bond – Protects patients from fraudulent behavior.
- Lottery Bond – Required to be purchased by business that engage in lottery.
- Union Bond – Obtained by union workers.