What is a fidelity bond designed to protect against?

What is a fidelity bond designed to protect against?

• A. Unpaid work claims from subcontractors
• B. Financial losses from businesses due to bankruptcy
• C. Employee dishonesty or theft
• D. Environmental damages caused by employees

Answer: (C)

A fidelity bond is specifically designed to protect a business from financial losses that occur as a result of dishonest acts by its employees, such as theft or fraud. This type of bond acts as a form of insurance, providing reassurance to the employer that they will be compensated for any losses incurred from an employee’s dishonest behavior. Fidelity bonds are particularly important for businesses that handle significant amounts of cash or valuable property, as they add a level of security and trust in the workforce. While other options like unpaid work claims or regular financial losses are relevant to different aspects of business insurance, fidelity bonds distinctly concentrate on the risk of employee dishonesty, making this the correct answer. Similarly, environmental damages related to employee actions fall under different types of liability insurance and do not relate to the core purpose of a fidelity bond.

A fidelity bond is specifically designed to protect a business from financial losses that occur as a result of dishonest acts by its employees, such as theft or fraud. This type of bond acts as a form of insurance, providing reassurance to the employer that they will be compensated for any losses incurred from an employee’s dishonest behavior. Fidelity bonds are particularly important for businesses that handle significant amounts of cash or valuable property, as they add a level of security and trust in the workforce.

While other options like unpaid work claims or regular financial losses are relevant to different aspects of business insurance, fidelity bonds distinctly concentrate on the risk of employee dishonesty, making this the correct answer. Similarly, environmental damages related to employee actions fall under different types of liability insurance and do not relate to the core purpose of a fidelity bond.