What You Need to Know About Employee Theft (And How to Protect Your Business)
Employee theft isn’t something most business owners want to think about—but it happens more often than you might expect. Whether it’s missing inventory, forged checks, or misused funds, even one dishonest act can lead to serious financial loss.
For small businesses, the impact can be especially hard to recover from.
That’s why many companies choose to protect themselves with an employee dishonesty bond—a type of fidelity bond that helps cover losses if an employee steals or commits fraud against your business.
At Bonding Solutions, we talk with business owners every day who say things like, “I had no idea this kind of coverage existed,” or “I assumed my insurance already covered that.” If you’re unsure whether your business needs this protection, this guide will walk you through everything—clearly and simply.
What Is an Employee Dishonesty Bond?
An employee dishonesty bond is a type of fidelity bond that protects your business from financial losses caused by dishonest acts committed by employees. That could include theft of money, property, or other valuable assets—whether it’s cash from a register, inventory that goes missing, or fraud involving company accounts.
This bond doesn’t cover accidents or mistakes. It specifically applies to intentional acts of fraud, theft, or forgery carried out by someone on your payroll.
Here’s how it works:
- Your business purchases the bond through a surety company.
- If an employee steals or commits fraud, and it meets the terms of the bond, you can file a claim to recover the loss.
- The bond provides financial protection, up to a specific coverage amount, which you choose when purchasing the bond.
Employee dishonesty bonds can be written to cover individual employees or your entire team, including part-time staff, volunteers, and even contractors in some cases. For many business owners, it’s an important part of a complete risk management strategy.
What Does an Employee Dishonesty Bond Cover?
An employee dishonesty bond provides financial protection for your business if an employee commits an intentional act of theft or fraud. That includes a range of dishonest behaviors that can result in direct financial loss.
Here are common examples of what’s typically covered:
- Theft of cash or checks from your business or customers
- Forged signatures on company documents
- Unauthorized transfers of business funds
- Embezzlement from accounts or payroll
- Stolen inventory or equipment taken for personal use or resale
These bonds may also cover dishonest acts committed by temporary employees, subcontractors, or volunteers, depending on how your policy is written.
What’s Not Covered?
It’s just as important to know what a dishonesty bond doesn’t cover. These bonds are not a replacement for business insurance or general liability coverage. They don’t apply to:
- Accidental damage or errors
- Cyber theft committed by third parties
- Employee negligence or poor performance
- Fraud committed by company owners or executives
At Bonding Solutions, we’ll help you understand exactly what your policy includes—and make sure you’re covered for the right risks based on your business setup.
Who Needs an Employee Dishonesty Bond?
If you have employees who handle money, inventory, or sensitive company information, your business is at risk for internal theft—and that’s exactly why an employee dishonesty bond can be so important.
This type of protection is especially valuable for:
- Small businesses that don’t have large internal audit teams or strict financial oversight.
- Retailers, service providers, or contractors with employees who handle cash or client property.
- Nonprofits or organizations with volunteers and board members involved in financial duties.
- Any business hiring seasonal, part-time, or temporary workers.
Some government contracts or client agreements may even require you to carry a dishonesty bond to win or maintain a job—especially if your employees are working on-site or have access to client funds or systems.
Even if it’s not required, many business owners choose this coverage as part of a smart risk management plan. It’s a simple, affordable way to protect your company from one of the most unexpected sources of loss: someone inside the business.
Employee Dishonesty Bond vs. Fidelity Bond vs. ERISA Bond
If you’ve been researching employee dishonesty bonds, you’ve probably come across the terms “fidelity bond” and “ERISA bond” too. It can get confusing fast—so let’s break it down.
Fidelity Bond is the broad category.
An employee dishonesty bond is a type of fidelity bond. Fidelity bonds protect businesses from losses caused by dishonest acts committed by individuals in a position of trust—usually employees.
Employee Dishonesty Bond is the specific type.
This bond covers theft, fraud, forgery, and other dishonest acts committed by employees against the business. Think of it as internal theft coverage. It’s one of the most common types of fidelity bonds used by small businesses and nonprofits.
ERISA Bond is a specific legal requirement.
If your business manages a retirement plan (like a 401(k)), the Employee Retirement Income Security Act (ERISA) requires you to carry a fidelity bond that protects plan participants from theft or fraud. This bond is separate from an employee dishonesty bond and only applies to retirement plan assets.
Blanket vs. Scheduled Coverage
When purchasing an employee dishonesty bond, you’ll also hear these terms:
- Blanket coverage protects your business from dishonest acts committed by any employee, without naming individuals.
- Scheduled coverage lists specific employees and only covers those named.
If you’re unsure which type of fidelity bond or coverage format is right for you, we’re happy to walk you through the options—so you only pay for what your business actually needs.
Why Business Owners Can’t Afford to Ignore Employee Theft
Employee theft is more common—and more costly—than most business owners realize.
According to the U.S. Chamber of Commerce, employee theft accounts for an estimated $50 billion in losses each year. Even more alarming? Roughly 30% of all business failures are linked to internal theft or fraud. For small and mid-sized businesses, one incident can be enough to cause lasting damage or even shut down operations entirely.
And it’s not always obvious. Internal theft isn’t limited to someone stealing cash from a drawer. It can show up as:
- Fraudulent vendor payments
- Manipulated timecards or payroll
- Stolen inventory or equipment
- Unauthorized use of business funds
That’s why having safeguards in place isn’t just smart—it’s essential. Risk management isn’t about being paranoid or distrusting your team. It’s about protecting the business you’ve worked hard to build.
An employee dishonesty bond acts as a financial safety net, giving you peace of mind that if something does go wrong, your business won’t bear the full cost of the fallout.
How Much Does an Employee Dishonesty Bond Cost?
The cost of an employee dishonesty bond—also called the bond premium—is typically based on a few main factors, including the size of your business, how much coverage you need, and your claims history.
For most small businesses, the premium is very affordable. In general, you can expect to pay around 1% to 3% of the total bond amount per year. So, for example:
- A $100,000 bond might cost between $100 and $300 annually.
- A larger $500,000 bond could range from $500 to $1,500 per year.
What affects your rate?
- Coverage amount — The higher the bond limit, the higher the premium.
- Number of employees — More people on your team = more risk to evaluate.
- Industry and business type — Some industries carry more exposure to internal theft.
- Past claims or losses — A history of fraud claims can lead to higher premiums.
If you’re not sure how much coverage your business needs, we’re here to help. At Bonding Solutions, we’ll walk you through the different limits and help you choose a bond that fits your business—and your budget.
You can also use our online surety bond calculator to get a personalized cost estimate in an instant. No pushy sales calls. No hidden fees. Just real answers from a team that knows this stuff inside and out.
How to Get an Employee Dishonesty Bond with Bonding Solutions
Getting covered doesn’t have to be complicated—and with Bonding Solutions, it isn’t.
We’ve helped thousands of business owners across the country secure employee dishonesty bonds quickly and with minimal hassle. Whether you’re looking to meet a contract requirement or just want to protect your company from internal fraud, our team will guide you every step of the way.
Here’s what the process looks like:
- Request a quote – Use our online form to share a few quick details about your business.
- Review your options – We’ll help you understand coverage limits, pricing, and the type of bond that fits your needs.
- Get bonded – Once approved, your bond can be issued fast—often the same day.
We know most business owners don’t deal with surety bonds every day. That’s why we keep things simple, speak in plain English, and make sure you’re not left guessing.
Get the Right Protection—Backed by a Team That Has Your Back
You’ve worked hard to build your business. The last thing you want is for one dishonest act to unravel all of it. An employee dishonesty bond gives you the confidence to move forward—knowing that if something goes wrong, you’re financially protected.
At Bonding Solutions, we don’t just sell bonds—we support business owners like you. Our team is responsive, knowledgeable, and genuinely here to help. Whether this is your first bond or your fiftieth, we’ll walk you through everything so you can make informed decisions without the stress.
No confusing forms. No long waits. Just honest answers and fast results.
Get a free quote today and see how easy it can be to protect your business with an employee dishonesty bond from a team that’s on your side.