What do fidelity bonds cover?

Also called employee dishonesty bonds, fidelity bonds protect your business or your client against:

If your employees commit forgery to commit fraud and steal, your business could find itself facing a significant lawsuit.

Example: A financial advisor at your investment firm forges a client’s signature on a check and steals thousands of dollars. A fidelity bond would reimburse the client for the stolen money.

Identity theft is a serious risk for companies that handle credit card and Social Security numbers. When your clients entrust you with sensitive personal information, it’s possible an employee could use that information for personal gain.

Example: An IT consultant at your company uses a client’s credit card number to purchase items. Once the crime is revealed, your company’s fidelity bond reimburses the client for losses.

Finance and technology businesses often handle client bank account numbers, which places them at risk for illegal electronic funds transfer by a dishonest employee.

Example: An employee at your web hosting business accesses the database of client information and initiates an illegal electronic funds transfer into a private account. A fidelity bond would reimburse the cost of the illegal transfer to the client once it was discovered.

Businesses that store or access sensitive client information open themselves up to risk when they have multiple employees. If an employee explores sensitive client records or delves into a client’s financial information, it could lead to a lawsuit.

Example: An employee at a mobile app development company finds a way to access personal data on clients’ smartphones. A client learns her phone has been compromised and sues. The company’s fidelity bond pays for the legal fees and settlement.

Surety bonds reimburse a client if your company fails to deliver promised services. If your business fails to complete a project or adhere to regulations, a surety bond protects the client against losses.

Example: A janitorial services company lands a six-month contract at a large office complex. However, after one month, the company loses several key employees and can no longer keep up with demand. The company’s surety bond reimburses the owner of the office complex for what he paid when the company has to cancel its long-term contract.

Professional liability insurance guards against lawsuits brought by clients claiming your work was unprofessional, erroneous, incomplete, or late.

Example: A client asks a computer repair business to fix his laptop by a specific date. The business fails to meet the deadline, which means the client cannot give a presentation on time. He sues the repair company; the lawsuit is covered by its professional liability policy.

Businesses that work with clients’ computers and other property run the risk of accidental damage. If an employee breaks a client’s laptop or causes other accidental property damage, general liability insurance can cover the cost of repairs or replacement.

Example: A web developer borrows a client’s laptop to work on a project. However, she spills a drink on the laptop, which breaks the keyboard. Her business owner’s policy, which includes general liability insurance, covers the cost of repairs.

Cyber liability insurance helps companies recover from data breaches and cyberattacks. It can help cover customer notification costs, credit monitoring services, and more.

Example: A web design company is targeted by a cyberattack that exposes its clients credit card numbers. The company’s cyber liability insurance pays for the cost of notifying the affected customers. It also covers the company’s legal costs when one of the clients sues.

The policy most often recommended by Insureon’s licensed agents is a business owner’s policy. A BOP bundles general liability insurance with commercial property insurance. It covers common third-party claims, as well as damage to your own business property. Not all businesses qualify – but those that do gain broad coverage at a discount.

Most states require workers’ compensation insurance for businesses that have employees. This policy helps pay for medical expenses related to a work injury or illness.

Looking for different coverage? See more policies.

Complete Insureon’s free 15-minute online application to compare small business insurance quotes from top U.S. insurance companies. You can also talk with a licensed Insureon agent specializing in your industry who can help you find coverage that matches your business and your budget.