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Questions About Dishonesty / Fidelity Bonds
WHAT ARE DISHONESTY
(Fidelity) BONDS?
The Surety Company Dishonesty Bond is employee fidelity coverage to protect the employer against a dishonest act by an employee. For the employer, the Dishonesty/Fidelity Bond provides protection for a very reasonable premium. For the agency, the bond can be an excellent door opening tool, leading to additional business. The Dishonesty/Fidelity Bond is easy to write, without all the complicated rate modifications and employee classifications other companies require.
WHAT IS
THE DIFFERENCE BETWEEN THE SURETY COMPANY’S FORM A AND FORM B COVERAGE?
1. Form A - The Form A bond is standard fidelity coverage. It is designed to cover professional and business offices such as accountants, physicians, dentists, attorneys, architects and realtors. The Form A coverage can also be used to cover the officers only of nonprofit organizations. This is a blanket position bond covering each employee to the penalty amount. * The Form A bond provides coverage exclusively to the employer, to protect against a dishonest act by an employee. A dishonest act by the employer would not be covered.
2. Form B - The Surety Company developed the Form B bond to provide employee fidelity coverage for businesses with more exposure. This form is used for businesses such as cafes, restaurants and retail operations. The Form B coverage is also used to cover nonprofit organizations when the employees of the organization are to be covered, along with the officers. To protect against unjustifiable allegations or charges, the employee must be convicted of the dishonest act before coverage would apply.** This is also blanket position coverage.
The Form B bond provides coverage to the employer to protect-
against a dishonest act by an employee, plus another feature known as
subscriber liability. Under the Form B bond, the subscribers to a service are
also protected against a dishonest act by an employee; however, it is important
to note that a subscriber to a service does not have a direct right of
recovery under Form B coverage. The Company only agrees to indemnify the insured
for any loss of money or other property which it sustains or for which it
becomes liable to any customer or subscriber through any fraudulent or
dishonest act committed by its employees.
* In
** The conviction clause
does not apply in
WHAT INFORMATION IS NEEDED TO UNDERWRITE A DISHONESTY/Fidelity
BOND?
Underwriting is limited to five basic questions:
1. Name and address of the applicant. - This is self-explanatory.
2. Penalty amount. - We offer
limits up to $100,000 for Form A and B Dishonesty Bonds and Janitorial Services
Bonds.
3. Description of
the business. - The description
will determine whether Form A or Form B is used. Final discretion in
classification is reserved by the underwriter.
4. Total number of
employees.- Keep in mind That all
employees, and owners / officers if they are to be included in coverage, are
included in this count. A person does not have to work a full 40-hour work week
to be considered an employee. Be particularly careful when a large organization
(i.e. department store or construction company) lists
only a small number of employees. Since these are blanket bonds, they cover all
employees.
5. Information
regarding prior losses. - When the business has suffered a previous
dishonesty loss, it is important to obtain a detailed explanation
of how the loss occurred and what steps
were taken to prevent the loss from occurring again. It is also important to
know whether the defaulting employee was
terminated. A prior loss does not mean the bond cannot be issued, but more
underwriting is needed.
Page Last Updated 07/30/2008 11:15 AM
YOU CAN CALL US DIRECT AT 1-800-361-1720
e-mail
surety@southcoastsurety.com
Fax Number (949) 361-9926
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