Bonding Requirements

Fiduciary insurance can also help to provide protection in retirement plans, but in a different way. Rather than protecting the plan’s participants, the fiduciary insurance protects the person managing the funds. If a fund manager is a fiduciary, they have a legal and ethical responsibility to act in the best interests of the plan’s participants. Fiduciary insurance is an optional policy that may protect them against personal financial losses. Though she owns and operates the store, she has a general manager who handles inventory and directly oversees the other employees. While Samantha is closing out the books for the year, she realizes that something isn’t adding up. After further digging, Samantha learns that her general manager has been stealing cash from the registers and clothing from the store.

If you know that a background check will turn up negative information, you may consider a fidelity bonds. The Federal Bonding Program is designed to help people who are considered high-risk because of criminal acts they have committed, such as theft. The bonds are issued to employers, free of charge to cover high-risk employees. Among those who can be helped by securing fidelity bonds are convicted felons, substance abusers and people with bad credit.

If a company has employees that commit fraudulent acts, the company itself may be exposed to legal or financial penalty in addition to the individual employee or employees who committed the act. As a result, companies are at risk of being exposed to such penalties, especially firms with a large number of employees. Fidelity bonds are insurance policies that cover firms for such damages.

How To Get A Surety Bond

Under this type of bond, you specify coverage for a position rather than the individual. Each employee of a business is covered, and new employees are added automatically.

Most businesses, including professional offices and nonprofit organizations, will benefit from this type of bond. A fidelity bond can help to protect the funds in a company’s retirement plan from financial losses at the hands of an individual.

bond employees who handle cash

Commercial crime insurance is a type of policy that protects companies against crimes committed against them. If an employee engages in dishonesty, forgery, fraud, extortion, or other forms of misconduct, the crime insurance policy can help the company recover its losses. If employees have access to money or valuable items they could steal or damage, a company may want a fidelity bond to protect those items. A fidelity bond is a form of business insurance that offers an employer protection against losses that are caused by its employees’ fraudulent or dishonest actions. This form of insurance can protect against monetary or physical losses. National and international unions that purchase bonding coverage for their affiliates should examine the timetables established for affiliates to report the funds handled during the fiscal year.

Do I Need A Fidelity Bond?

The amount of bonding coverage must be set at the start of each fiscal year. This can be of particular importance if the amount of bonding coverage must be increased because of an increase in the amount of funds handled during the fiscal year. The LMRDA prohibits any person who is inadequately bonded from receiving, handling, disbursing, or otherwise exercising custody or control of any of the labor organization’s funds or property.

She has a fidelity bond that specifically covers misconduct from employees. After firing the manager and filing a police report, Samantha is able to file a claim with her insurance company and recover her financial losses. A business service bond helps a company to recover losses on behalf of its customers’ money, equipment, and personal belongings due to dishonest acts by an employee. Companies may choose to purchase this type of fidelity bond if they have employees going to customers’ homes to work, or managing money for customers. Specialized forms of fidelity bonds may cover particular instances, such as employees committing fraud or illicit acts, while performing services for customers. For example, if a window repair worker is sent to a home that was damaged by a storm and steals jewelry from the residence, the company may have exposure concerning their employee’s actions.

  • You can also obtain a copy of the list from the nearest OLMS office.
  • Companies bond employees to protect against employee theft and dishonesty.
  • A risk management bond protects the employer against the loss of finances from employees that have direct access to assets such as cash, deeds, securities and checks.
  • Considering how much money is readily accessible to tellers or other bank employees, bonding can save financial institutions a great deal of money.
  • Kelchner has a degree from Southern New Hampshire University in English language and literature.

A fidelity bond is an insurance product companies use to help protect themselves from financial losses. These policies generally compensate a company for any losses they incur at the hands of their employees. If an employee steals from the firm or damages company property, a fidelity bond might cover the financial loss. While some fidelity bonds cover losses as a result of employee actions, third-party bonds specifically cover losses as a result of contractors. An ERISA bond protects the money in a company’s 401 plan or pension plan.

A surety bond is basically an insurance policy that assures a customer that the contractor they hire will complete the job. When the contractor bids on the job, the hiring company knows the work will be completed. If the contractor fails to complete the job, the surety bond compensates the company for any losses they incurred. These policies protect the money in the plan from acts of fraud or dishonesty from those with access to the money.

These control activities include segregation of duties, proper authorization, adequate documents and records, physical controls, and independent checks on performance. For example, many national or international unions obtain a bond covering both their organization and their affiliated unions. Contact your national or international union if you have any questions about whether your union is covered by such a bond.

A fidelity bond is generally a first-party policy, meaning it provides protection to the policyholder against financial losses at the hands of an employee’s fraud or misconduct. But these policies generally don’t protect third parties from financial loss. In general, fidelity bonds protect companies from incurring losses as a result of criminal behavior or misconduct by employees.


There are different types of bonds, depending on the type of business. Also known as banker’s blanket bonds, they can take on a variety of forms. The named schedule fidelity bond is an insurance policy taken on a specific employee. The bank can only make a claim with proof that the employee in question committed theft.

For example, a self-employed house cleaner can obtain coverage to protect against damage to the customer’s home. Businesses and self-employed workers use bonding in advertising when listing the attributes of the company. Companies may choose the type of bond that best meets the needs of the organization. Individual bonds cover one employee, while blanket bonds cover all workers in a company. A bond can cover a particular position in the company and cover any employee working in the particular job. The real difference comes down to what each insurance company chooses to call the product.

bond employees who handle cash

You designate a set amount of coverage for a list of employees that you provide for the insurance company. Each time you hire a new employee, you have to contact the insurance company to have that person added to the list, if you choose to do so. Collection under this coverage hinges on absolute proof that an employee did in fact steal from you. Employers can use the fidelity bond to protect themselves from theft. There are three basic types of fidelity bonds that you can apply for.

Employee Bonding

A contingency is a potential negative event that may occur in the future, such as a natural disaster, fraudulent activity or a terrorist attack. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Investopedia does not include all offers available in the marketplace. Luanne Kelchner works out of Daytona Beach, Florida and has been freelance writing full time since 2008.

The purpose of this type of fidelity bond is to recover any losses that take place at the hands of someone handling the fund. For example, if an HR professional who manages the 401 plan steals money, an ERISA bond may cover it.

Get A Free Fidelity Bonds Quote From Dagostino Agency Insurance

Some might call it crime insurance while others may call it a fidelity bond. Others call it a combination of the two, such as fidelity and crime insurance. Computer crime insurance is a policy that covers theft or misuse of computers by a company’s employees but not by outside hackers. Bond providers will review your criminal history as part of the background check. Considering you are trying to get a bond to be able to handle cash, your work history will be checked to see if you have ever been arrested and/or convicted of theft. One of the things you will need to be bonded to handle cash is good credit. The company that provides you with the bond will do an extensive background check on you, and that will include checking your credit.

If you must be bonded to handle cash, you may have to secure the bond through a surety company. According to, you may be legally required to purchase a surety bond depending on your position or where you work. Staffers at the bonding company will evaluate your background to determine if you are eligible for a bond. Be prepared to pay an application fee, which can vary widely, starting at $100. In addition to the money you will need to pay the application fee, you will also need to have money to pay the premiums for your bond. As a business owner, you should consider a fidelity bond when you have employees trusted to handle cash, even if it is only one person.

Cash on hand, deposits in any type of financial institution, certificates of deposit, U.S. Treasury securities, corporate stocks and bonds, and accounts and loans receivable are common examples of liquid assets. Property of a relatively permanent nature, such as land, buildings, furniture, and fixtures is not a liquid asset. Therefore, a company must have adequate controls to prevent theft or other misuses of cash.

Employee Rights

Fidelity bonds can be considered part of a business’s approach to enterprise risk management. Such an insurance policy as a sort of protection should the company suffer losses caused by fraudulent or criminal employee actions taken against the company or its clientele.

This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals.