Fidelity bonds
Fidelity bonds
Fidelity bonds protect your company from financial loss if an employee commits fraud, theft, or forgery against a client or your business. They are often required by client contracts.
When does your tech business need fidelity bonds?
If your tech business handles confidential or sensitive client information, your clients may ask you to purchase a fidelity bond. Even if your clients don’t require them, fidelity bonds help limit financial risk from employee fraud or theft.
Fidelity bonds differ from other types of business insurance. If an employee at your company steals money or property from your business or a client, they provide reimbursement for the amount that was stolen.
This type of coverage is also called commercial crime insurance.
What do fidelity bonds cover?
Fidelity bonds compensate your clients and your business for dishonest acts committed by employees, including:
- Fraud
- Theft
- Forgery
- Unlawful data access
Examples of fidelity bond coverage
Fidelity bonds provide coverage when an employee:
- Commits fraud
- Embezzles company funds
- Steals property from you or your clients
- Forges a signature for personal gain
First-party versus third-party fidelity bonds
First-party fidelity bonds protect your business
First-party fidelity bonds protect your tech business when an employee commits fraud, theft, or forgery against your business.
If employees have access to your finances or valuable assets, a first-party fidelity bond can give you peace of mind and provide financial reimbursement if an employee steals from your company.
Third-party fidelity bonds protect your clients
Third-party fidelity bonds protect your clients from fraud, theft, or forgery committed against them by one of your employees.
A third-party fidelity bond reimburses your clients if an employee of your business steals money or property from them.
Which tech businesses should purchase fidelity bonds?
If your employees have access to financial or other sensitive information or assets, fidelity bonds provide financial protection if an employee breaches your trust.
Some tech businesses, such as those that build customer databases or payment systems for clients, are more vulnerable to employee fraud. These companies may have a greater need for fidelity bonds.
How much do fidelity bonds cost?
Factors that affect the cost of a fidelity bond include:
- The amount of sensitive information your business handles
- The number of employees with access to sensitive information
- The coverage you choose
Get the right fidelity bond for your tech business
Different tech businesses have different needs and levels of risk when it comes to employee fraud. Luckily, you can choose a fidelity bond in the amount that you need, which helps keep the cost affordable.
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