Employee Dishonesty Bonds

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Employee Dishonesty Bonds

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your employee dishonesty bond needs.

What Are Employee Dishonesty Bonds?

Employee dishonesty bonds are a type of fidelity bond that protects business owners against the financial consequences of crimes committed by dishonest employees, such as stealing cash or goods, embezzling company funds, or defrauding the company in some other manner. They do not provide financial protection against losses resulting from criminal acts committed by employees while working on a client’s premises. To obtain that kind of protection, you would need to purchase a business services bond.

Employee dishonesty bonds function more like insurance than like a surety bond. For example, most surety bonds are mandated by an “obligee” for the protection of some government entity or contracting authority. However, with employee dishonesty bonds, there is no obligee requiring an employer to purchase one.

Who Needs Them?

Business owners purchase employee dishonesty bonds voluntarily because they know that not all employees are honest. Businesses in which employees handle cash, do the accounting, have access to checkbooks to pay bills, or are otherwise positioned to commit an act of theft or fraud are particularly vulnerable.

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.

How Do They Work?

If you purchase an employee dishonesty bond and suffer a monetary loss because of the illegal act of a covered employee, you have the right to file a claim against the bond to obtain compensation for the loss. The surety bond company, also known simply as the surety, processes claims in much the same way as an insurance company. 

Before paying a claim, the surety will investigate it to make sure that it is legitimate. The terms of some employee dishonesty bonds require there to be a criminal conviction of the dishonest employee before a claim will be paid. The surety makes payment directly to the employer up to the total amount of coverage purchased.

What Do They Cost?

The surety determines the premium cost of an employee dishonesty bond through an underwriting process that considers the coverage amount requested, the number of employees to be covered, and whether the business owner has instituted measures to prevent employee theft. Typically, blanket coverage for all employees costs more than coverage for certain individuals only, such as those who have access to and control over cash, checks, financial records, and bank accounts. These are the people with the greatest opportunity to commit theft or fraud against the business. 

The premium for an employee dishonesty bond rarely exceeds more than two or three hundred dollars for up to $100,000 of coverage, although this may vary depending on the principal’s business, internal processes and overall creditworthiness.