If you want to protect your business from employee theft and fraud, you might want to get an Employee Dishonesty Bond.
NOTE: If you are looking to protect your customers from theft by your employees, please see our Business Service/Janitorial Bond post. This post is only about protecting your business from theft by your employees. Your customers are not covered with an Employee Dishonesty Bond.
What is an Employee Dishonesty Bond?
An Employee Dishonesty Bond is a type of Fidelity Bond that protects your business from dishonest acts by your employees. This includes protection against fraud, embezzlement, forging checks, stealing money or merchandise, and so forth.
An Employee Dishonesty Bond does not cover against your employees stealing from your customers. There is a bond for that, though. You can read about that type of bond in our Business Service Bond/Janitorial Bond post.
Employee Dishonesty Bonds are not required by law. Any business can get one of these bonds as an added protection for their business.
You can learn how Employee Dishonesty Bonds work towards the end of the article.
For a quick understanding of the different type of Fidelity Bonds, including an Employee Dishonesty Bond (Commercial Crime Fidelity Bond), watch this video:
How Much Does an Employee Dishonesty Bond Cost?
Employee Dishonesty Bonds are quite inexpensive for the coverage they offer.
For example, if a business wants to cover themselves for $100,000 of losses, they could likely secure their bond for $300-$400 a year.
Some Employee Dishonesty Bonds start at just $100.
Your rate is based off the number of employees you have, and the amount of coverage you would like to have.
To see what you’d pay for an Employee Dishonesty Bond, get a free quote below:
How Does an Employee Dishonesty Bond Work?
When you get an Employee Dishonesty Bond, you are covered for employee theft, fraud, etc.
If an employee committed an act of theft or fraud, you could make a claim against the bond. If the claim is determined to be valid by the surety company, you would be financially compensated for the amount that the employee stole.
For example, let’s say you own a bakery and you hire a new employee, Todd, to work the register. Todd makes the poor decision to steal $10,000 from the register over the course of a few years. You discover this, and because you are bonded, you can make a claim against the surety bond you have.
The surety company investigates the claim and determine it to be true that Todd indeed stole $10,000 from the register. The surety company would pay you $10,000 to make you financially whole again.
In some cases, Todd would need to be convicted of theft before you could make a claim against the surety bond. Be sure to check your individual policy for if a conviction is necessary.
You can learn more about how Employee Dishonesty Bonds can save a small business.