Fidelity Insurance

April 13, 2006

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A small business owner needs to carry various types of property insurance coverage, and he or she may want to consider purchasing insurance that protects assets from the dishonest acts of others.

Fidelity insurance covers loss of property due to an employee's dishonesty, as well as a suspicious loss of property that cannot be directly attributed to a particular employee. Coverage usually extends to losses of property due to theft, embezzlement, forgery and computer crimes.

Generally, the policy will cover the loss of property while on the business's premises, as well as while the property is in transit or otherwise temporarily in another location. Because policies differ in these respects, and because employee dishonesty can take many forms, a thorough reading of the proposed policy, in advance, is required, to determine the scope of any exclusions.

If you only want to cover your business's funds and the people who have access to them, you may be able to save on insurance premiums by buying a fidelity bond. This less expensive, but more specific and narrow, form of fidelity insurance is limited to the individual, or individuals, who are named in the policy.

Usually, a business's treasurer and other persons who have access to the entity's cash (and other vulnerable assets, such as securities) and accounting records are bonded. Because a fidelity bond is limited to particular individuals, premiums generally are lower, compared to fidelity insurance, which protects against losses due to employee dishonesty in general.