Fidelity Bond or Commercial Dishonesty Bond / Employee Dishonesty

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What is a Third Party Fidelity Bond or Commercial Dishonesty Bond / Employee Dishonesty?

Some of your clients, especially those in the financial services industries, may be concerned about your insurance in the event that one of your employees or contractors steals property, money, or electronically transfers funds while on their premises or accessing their secure systems remotely.  Most insurance policies exclude coverage for intentional wrongful acts, and employee theft would be considered intentional.  Third Party Fidelity or Employee Dishonesty coverage is actually a type of “property” coverage that is triggered when there is an allegation of theft of a client’s property by one of your employees.  (First Party Fidelity covers theft of your property by your employee and is a separate line of coverage.)  Many financial institutions will require in your contract that you have Third Party Fidelity in place before allowing your employee to do work for them.

Why do I need a Third Party Fidelity Bond or Commercial Dishonesty Bond / Employee Dishonesty coverage?

A Fidelity or Commercial Dishonesty Bond (also known as Employee Dishonesty) provides coverage when an employee steals money, equipment or other assets from you or one of your clients. “First-party fidelity” covers your property and “third-party fidelity” applies to your client's property.

Fidelity coverage may be described in your contract in this way: “Commercial Crime Insurance in the amount of $1,000,000 including coverage for theft or loss of Client property."