Other names for this bond: employee dishonesty bond, fidelity bond, dishonesty bond
WHAT ARE DISHONESTY (Fidelity) BONDS?
The 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.
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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 Texas , Form A is commercial blanket coverage. All employees are covered for an aggregate amount up to the bond penalty.
** The conviction clause does not apply in North Carolina but an indictment is required. The state of Nebraska requires either a conviction or a guilty plea.