Fidelity bond contract definition: What you need to know
A fidelity bond is a type of insurance that protects a company from losses caused by fraudulent or dishonest acts committed by its employees. A fidelity bond contract is a legal document that details the terms and conditions of the bond.
Fidelity bonds are typically purchased by companies that have employees who handle money or other valuable assets. The bond provides protection against theft, embezzlement, forgery, and other types of employee fraud.
The fidelity bond contract outlines the scope of coverage provided by the bond. It establishes the maximum amount of coverage available, the types of losses covered, and any exclusions or limitations that may apply.
The contract also includes provisions for filing claims and resolving disputes. It may require the company to provide evidence of loss, such as police reports or financial records, and may specify the timeframe within which claims must be filed.
Fidelity bond contracts can be tailored to meet the needs of individual companies. They may include additional coverage for specific types of losses or higher coverage limits than standard policies.
Fidelity bonds are often required by law or by contract. For example, banks and other financial institutions are typically required to have fidelity bonds in place to protect against employee fraud.
In summary, a fidelity bond contract is a legal document that outlines the terms and conditions of a fidelity bond, which is a type of insurance that provides protection against losses caused by employee fraud. Companies that handle money or other valuable assets should consider purchasing a fidelity bond to protect against financial losses.