by 
The Curious Bag
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A fidelity bond serves as business insurance. Institutions purchase fidelity bonds to protect against potential damages caused by employees. Insurance companies and security firms are often required to purchase fidelity bonds.
Function
Fidelity bonds protect against employee infidelity, which may include theft, embezzlement, forgery, dishonesty and negligent action.
Features
Fidelity bonds provide complete insurance coverage---from $5,000 to $25,000, according to Michigan.gov---without a deductible.
Time Frame
Fidelity bonds generally last for six months, with extensions beyond that if needed.
Types
A fidelity bond's premium will depend on the type of business, the number of employees, the exact coverage and the desired limits. Some fidelity bonds even protect against robbery and vandalism.
Considerations
Employers often purchase fidelity bonds when hiring employees who may have prison records or other high-risk factors in their backgrounds.
Warning
Most fidelity bonds do not cover loss due to poor workmanship, job injuries or work accidents.
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