Understanding the Different Types of Fidelity Bonds - Bonding Solutions

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Understanding the Different Types of Fidelity Bonds

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When it comes to a company’s image, fidelity bonds are often a good solution. These forms of surety bonds shield a company’s clients or other third parties from employee wrongdoing. They are used in a variety of sectors, from janitorial services to pension administration, and it’s important for someone working in these sectors to understand the different forms of surety bonds.

A company’s image and its clients are two of the most critical aspects of its operation. These are the foundational elements of almost any business’s success, so having the resources to build a trustworthy reputation and a positive relationship with one’s customer base is critical.

What Is a Fidelity Bond, and How Do I Obtain One? 

If we want a clear definition of what fidelity bonds are, we can summarize them as a type of surety bond that protects employers from employee dishonesty or financial misconduct. Theft, larceny, embezzlement, forgery, and a variety of other financial offenses are all covered by a fidelity bond. This form of insurance can protect against both monetary or physical losses.

Fidelity bonds also protect policyholders from losses that they experience as a result of fraudulent acts by various individuals. Specifically for business owners, fidelity bonds protect against loss caused by dishonest acts by employees. To avoid these types of fraud from happening, contact Bonding Solutions for advice and further explanations or apply for a fidelity bond directly online.

Business Service Bond

The most popular form of fidelity bond is a business service bond. They are also known as business bonds or janitorial service bonds. Their purpose is to ensure that workers who have access to a client’s home or business act honestly and ethically. 

Businesses that often need business service bonds include:

  • Cleaning services such as maids and janitors (Janitorial Services)
  • Home health care services
  • Landscape services
  • Pest control services
  • Swimming pool services
  • Moving services
  • Locksmith services

Business service bonds, unlike certain other surety bonds, are not required by any government entity. A customer of a service sector, on the other hand, would often request that the company acquire a fidelity bond before signing a contract. This provides a financial assurance of employee behavior, which helps to establish a strong start to the relationship between the company and its customer.

Furthermore, obtaining a business service bond aids in the development of a trustworthy and meaningful relationship with your clients.

Employee Theft and Dishonesty Bonds

An employee theft bond prevents a company from employee theft or misconduct. Small companies can easily be financially ruined by the behavior of a single dishonest employee, so businesses should consider these bonds to maintain their success and security.

Employee fraud and dishonesty bonds vary from most other forms of surety bonds in how they operate. These bonds work much like conventional insurance policies in that the corporation pays the surety to cover the damages in the event that an employee commits a crime against the company. Theft and dishonesty bonds for employees are available in a number of bond amounts. Premiums differ depending on the number of workers, the state in which the company is located and operating, as well as many other key factors.

ERISA Bonds

Lastly, we should mention what ERISA bonds are and how to use them. Employees with fiduciary responsibilities on some forms of pension and profit-sharing schemes are expected to provide ERISA surety bonds. The Employee Retirement Income Security Act of 1974 (ERISA), which defined the provision, gave these bonds their name. An ERISA bond protects plan beneficiaries from bribery or other wrongdoing by the plan’s administrator.

An ERISA bond is required for fiduciary employees whose duties include any or all of the following: 

  • Managing plan assets such as cash, checks, and bond certificates on a physical level 
  • Transferring or disbursing money from a retirement account 
  • Signing tests and other types of negotiable instruments 
  • Managing and supervising other workers who perform some of these tasks

ERISA bonds must cover at least 10% of the balance of plan funds administered by the employee. ERISA bonds are eligible for an instant buy without a credit check for coverage amounts under $500,000. 

About Bonding Solutions

Bonding Solutions is a bonds-only agency that works with thousands of insurance agents and brokers nationwide. With over 60 years of experience working directly with business owners, we offer the expertise and tools needed to satisfy any bond need. If you need a bond today, we can assist.  Insurance agents can confidently use us as your “back office” bond support and seamlessly service your clients. We are a leader in the surety bond industry with exclusive, innovative tools and programs that we provide to you at no additional charge.

Bonding Solutions is the simplest and quickest way to obtain a fidelity bond. Businesses can get started right away by requesting a free online surety bond quote or contacting us by phone.

published on Wednesday, September 15th, 2021

Questions?

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(877) 841-6745