Someone else’s misdeeds shouldn’t damage you financially!
What is Fidelity Insurance
Fidelity insurance or fidelity bond insurance is a business insurance product that provides protection against business losses caused due to employee dishonesty, theft or fraud. The policy compensates such losses to business owners within the limitations of the policy.
Why Get Fidelity Insurance
As this insurance protects organizations from any financial loss suffered as a result of acts of dishonesty conducted by an employee, it is of utmost importance for every company to but this policy. The benefits of holding a called fidelity bond/guarantee insurance policy have been stated below.
- This insurance policy safeguards the company from financial losses arising due to forgery, money misappropriation (defalcation), embezzlement, and other dishonest acts by employees.It further protects the company from situations that usually arise due to misuse of the employment capacity by cashiers, accountants, etc.
- Fidelity guarantee insurance assures that as an organization your hierarchy is maintained and your employees are wary of performing any malpractices.
- It protects the reputation, standing and employee reputation and the employer.
- It ensures absolute transparency in accounts checking and standard supervision within the organization.
What Does a Fidelity Insurance Cover
As per this insurance policy the insurer covers the insured organisation against a pecuniary loss (only if it is direct) due to acts of fraud/dishonesty conducted by any employee, under the following situations
- You will be entitled for coverage on and after the day the insurance policy commences.
- Coverage shall also be provided during unhindered service with the organization, and its discovery during the existence of the policy. This is also valid within a year/12 calendar months of the policy expiration.
- In case of demise, termination or retirement of the employee within 12 calendar months of such an event; whichever event occurs earlier.
- Depending on the requirement of this cover being applicable to a single employee or a group of employees there are three types of plans, namely individual policy, collective policy, and floating policy.
What are the exclusions
There are certain situations, where the fidelity insurance doesn’t provide coverage or protection. While some specific scenarios can be covered as add-ons to your coverage, given below is the list of situations that get excluded from the coverage.
- There is no coverage for any consequential loss, unlike a pecuniary loss.
- If the loss incurred is not in terms of finances or goods of the organization, then it isn’t covered.
- The act of dishonesty by the employee should be committed during the tenure of the specified duties.
- If an employee under the policy had quit the organization earlier, but was re-employed again, any loss resulting out of this act will not be covered (if the consent of the insurer hasn’t been obtained before reappointing him).
- If the loss has been incurred due to a wrong/bad accounting process, and not as an act of dishonesty; it is not covered.