Understanding What are Covered by Fidelity Bonds

The fidelity bond covers job seekers who are considered high-risk due to some factor in their personal background and who have been rejected by a commercial bonding company.

Fidelity bond may cover employees who are inherently possesses a higher risk due to a few factors on their personal life or those who have been declined request by commercial bonding companies. A fidelity bond can provide about one hundred percent insurance coverage and there is no deductible. Your employer will be completely covered from any financial or legal losses due to workers' incompetence and dishonesty. In most company, you'll get up to $30,000 coverage from losses. In some cases this amount may not seem much, but money is money, it is better to get some compensation than nothing at all.

The bond can be considered as incentive for you to hire specific elements of society, because they can be considered high risk or have low competency. For example, mining companies in some countries are expected to hire local population for certain percentage of their workforce. Hiring people only based by geographical location may carry some risks as they may not have the education, the honesty or the motivation to work in a mining company.
To cover the mining company from risks caused by bad employees, the country where the mining company located may agree to grant you fidelity bond, at least for a few years after the company starts the operation. In some cases the employer may get up to six months of free coverage, when certain requirements are satisfied. If the employer still thinks that it is necessary to extend the bond, then it is possible to do that, of course at full-priced premium.

You should be aware though that, the bond doesn't cover the following aspects in your business operation
- Accidents and job-related injuries
- It can be used as bail bonds in the court
- It is not applicable for self-employed individuals (one-man company)

How Fidelity Bond Works?

Fidelity bond is in essence an insurance for your business operation. It is often bought to cover business owners from all kinds of property or financial losses, caused by hiring incompetent or risky employees. Many fidelity bond services are also a traditional insurance company. As the result buying fidelity bond from your own insurance company may benefit you, because of the possibility of lower premium and extra perks. The bond covers you against failure during work, theft and financial losses. The covered employee can be determined by specific department or the entire company, certainly the premium needed for an accounting employee and a janitor is different, due to the unique risks involved for each workers.
Many fidelity bond companies will agree to cover up losses until up to $30,000 after an incident or accident. The bond may serve as an enticement for employers to hire hi-risk workers.
Bond coverage work this way,
The coverage is based by the nature of work and the value of related properties
Bonds can be issued until the maximum value. The increment of bond value is usually around $5000. The bond usually has no deductible amount. It will be implemented after the employee go to work for the first time. The bond contract is usually sent to your employer and it will be expire after six months.
This is the common way fidelity bonds work, however your company may enforce a unique requirements that wouldn’t be found elsewhere. Ask the salesperson, whether there is anything different with the fidelity bond program you want to apply. But still, trust your instinct, a fidelity bond company may give you a weird requirements, it could be a good idea to find another service. To know if something is unusual, you should check with several service before buying and find repeatable patterns.