Fidelity Bonds

Protect your business, build trust, and safeguard assets online in minutes

What Is a Fidelity Bond?

A fidelity bond is a type of surety bond commonly referred to as Employee Dishonesty Insurance. Employee dishonesty is more common (and costly) than you might think, with U.S. businesses losing over $50 billion annually due to theft.

A fidelity bond protects your clients from losses caused by a dishonest act by one of your employees (such as theft or embezzlement). It also builds trust with prospects and protects your reputation and client relationships. A fidelity bond involves two main parties:

Who’s protected? Your business (the principal) and your client
Who guarantees the coverage? The surety company– the company supplying the fidelity bond

Fidelity bonds are similar to insurance, but with a twist: there’s no deductible. However, unlike an insurance claim, your business repays the surety company for any claim they pay out (up to the bond’s limit).

Business Service Bonds

A business service bond protects your clients from theft caused by your employees while working on-site. If your team performs cleaning services in homes or businesses, this bond is a must!

Bonding is common in many different industries, including:

Janitorial services
Landscaping
Cannabis
Fitness training — and more

ERISA Bonds

An ERISA bond is a must for businesses that manage employee retirement funds. It protects against theft or mishandling by those managing 401(k)s and pension plans.

By law, the bond needs to cover at least 10% of the plan’s total assets to ensure any losses caused by dishonest actions are covered, keeping retirement savings safe for employees.

What Does a Fidelity Bond Cover?

An employee might pocket expensive jewelry while working at a client’s home. But with a fidelity bond in your corner, you can rest easy knowing your reputation and client relationships will be protected.

If your employee steals a client’s laptop during a cleaning job

Our bond partner can reimburse the client for the stolen item so you can keep their trust intact.

If a personal trainer steals a gym member’s wallet from their locker

Our bond partner can cover the stolen funds while they pursue legal action.

If a landscaping crew member steals a customer’s high-end tools

Our bond partner can compensate the client for the replacement, preserving your business’s reputation.

Who Needs Employee Dishonesty Insurance?

If your business deals with any of the following, you should consider a fidelity bond.

Cleaning companies

Reimburses homeowners if your employee steals jewelry, cash, or other valuables.

Construction or landscaping

Compensates property owners or business clients if your employee steals tools, materials, or money.

Accounting and financial services

Covers losses for account holders if your employee embezzles client funds.

Retail businesses

Reimburses businesses if your employee steals cash or inventory.

Property management companies

Compensates tenants or property owners if your employee steals rent payments or tenant property.

Restaurants or bars

Covers customers if your employee steals money, valuables, or tips.

How Much Do Fidelity Bonds Cost?

The cost of fidelity bonds usually ranges from 1% to 15% of the total bond amount. So, you might pay anywhere from $100-$1500 annually for a $10,000 bond. Your cost will depend on two primary factors:

Bond amount: The higher the amount, the higher the premium. For example, if you need a $25,000 bond, you’ll pay more than if you only need a $5,000 bond.
Type of bond: Different types of bonds come with different levels of risk, which can affect the price.

How To Apply For an Employee Dishonesty Bond

Getting bonded with Insurance Canopy is quick and simple. Follow these easy steps to get started:

Select the bond amount you need: Consider your client’s property value or contract requirements — many small businesses opt for limits of $25,000 or less.
Make your payment: Complete the payment process quickly and securely
Get bonded instantly: Once paid, your bond confirmation will be available immediately

Questions About Fidelity Bonds

Is bonding the same as insurance?

Bonding is not the same as insurance. Insurance protects your business from common liability risks (think third-party injuries or property damage). Bonding guarantees that your clients will be reimbursed if your employee steals from them. It’s best to have both!

How long does a fidelity bond last?

A fidelity bond covers at least one year but can extend for longer periods. For example, multi-year bonds like ERISA bonds, often include an “inflation guard” feature, meaning the coverage amount automatically adjusts each year to meet ERISA requirements.

What is the most popular form of fidelity bond?

The most common type of fidelity bond is the business service bond. It’s widely used because it’s straightforward, affordable, and protects clients from theft caused by employees while working on-site.

How do I file a claim on a fidelity bond?

Filing a claim is easy! Just follow these steps:

Report the incident by completing a claim form: Your client files a claim with the bond company as soon as possible, detailing what was taken or damaged and when. Include all relevant documentation, such as theft reports and communication records, and submit the completed form and supporting evidence to our bond partner for review.
Verification and resolution: Work with our bond partner’s claims team as they investigate and verify your claim and respond promptly.
Reimbursement: If the claim is approved and paid out, you will then fulfill any reimbursement obligations.

Keep in mind that the exact process can vary by provider, so make sure to check the terms when you get your bond.

What’s the difference between a surety bond and a fidelity bond?

A surety bond is a promise to complete a job or follow specific rules. It’s a three-party agreement between the business (principal), the party that requires the bond (obligee), and the bond provider (surety company).

A fidelity bond, on the other hand, is a promise to be honest and not take things that aren’t yours. It’s a two-party agreement between the business (principal) and the bond provider (surety company).