As a business owner, you want to trust your employees and believe that they have your best interests at heart. However, the unfortunate reality is that employee fraud and dishonesty can occur in any workplace. This is where dishonesty bonds come into play. In this article, we will discuss the basics of dishonesty bonds and how they can protect your business from financial loss.
What is a Dishonesty Bond?
A dishonesty bond, also known as a fidelity bond or a trust bond, is a type of insurance that protects a business from financial loss due to employee fraud or dishonesty. It is a contract between the business, the insurance company, and the employee. The bond guarantees that the business will be reimbursed for any financial loss caused by the dishonest actions of an employee.
How Does it Work?
When a business purchases a dishonesty bond, they are essentially transferring the risk of employee fraud or dishonesty to the insurance company. If an employee commits an act of fraud or dishonesty, the business can file a claim with the insurance company to recoup their financial losses. The insurance company will then investigate the claim and determine if it is valid. If the claim is approved, the insurance company will reimburse the business for the financial loss, up to the limit of the bond.
Who Needs a Dishonesty Bond?
Any business that has employees who handle money, sensitive information, or have access to valuable assets should consider purchasing a dishonesty bond. This includes businesses in industries such as banking, retail, healthcare, and government. Even if you trust your employees, it is always better to be safe than sorry.
What Does a Dishonesty Bond Cover?
A dishonesty bond typically covers losses caused by theft, embezzlement, forgery, and other fraudulent activities committed by an employee. It may also cover losses caused by the dishonest actions of third parties, such as contractors or vendors. However, it is important to note that dishonesty bonds do not cover losses caused by errors or mistakes made by employees.
How Much Does it Cost?
The cost of a dishonesty bond will vary depending on the size of your business, the number of employees, and the amount of coverage you need. Generally, the cost of a dishonesty bond is a small percentage of the coverage amount.
Employee fraud and dishonesty can have a devastating impact on a business, both financially and reputationally. By purchasing a dishonesty bond, you can protect your business from these risks and have peace of mind knowing that you are covered in case of any fraudulent activities. If you are interested in purchasing a dishonesty bond, we at Harrison Insurance are here to help.