Which Bond type is an insurance against losses due to the dishonesty of an employee?

Which Bond type is an insurance against losses due to the dishonesty of an employee?

• A. Fidelity Bond
• B. Payment bond
• C. Performance or completion bond
• D. Surety bond

Answer: (A)

Fidelity bonds are designed to protect a business from losses caused by the dishonesty of employees, such as theft, fraud, or forgery. If a covered employee acts dishonestly, the bond reimburses the employer for losses up to the policy limit, making it a specific protection against internal risk. This focus on employee conduct distinguishes it from other bonds: a payment bond guarantees that the contractor will pay subcontractors and suppliers, while a performance or completion bond ensures the contractor finishes the project per the contract. A surety bond is the broad category of bonds issued by a surety company, with fidelity bonds being a specialized type that targets honesty of personnel within the organization.

Fidelity bonds are designed to protect a business from losses caused by the dishonesty of employees, such as theft, fraud, or forgery. If a covered employee acts dishonestly, the bond reimburses the employer for losses up to the policy limit, making it a specific protection against internal risk. This focus on employee conduct distinguishes it from other bonds: a payment bond guarantees that the contractor will pay subcontractors and suppliers, while a performance or completion bond ensures the contractor finishes the project per the contract. A surety bond is the broad category of bonds issued by a surety company, with fidelity bonds being a specialized type that targets honesty of personnel within the organization.