What Is a Fidelity Agreement and Why Is It Important?
A fidelity agreement, also known as a fidelity bond or employee dishonesty insurance, is a contract between an employer and an insurance company. This agreement protects the employer from financial loss in the event of employee theft or fraud.
Employee dishonesty can take many forms, including theft of cash, inventory, or intellectual property, embezzlement, or forgery. Unfortunately, these types of crimes are more common than we think, and they can cause significant financial damage to a business.
A fidelity agreement can help mitigate this risk by providing insurance coverage for losses caused by employee dishonesty. It can also serve as a deterrent to potential fraudsters, as the existence of the agreement may make them think twice before committing a crime.
In addition to financial protection, a fidelity agreement can also provide peace of mind to business owners and their customers. By demonstrating a commitment to integrity and accountability, businesses can build trust and credibility with their stakeholders.
To obtain a fidelity agreement, employers typically need to provide information about their business operations, including the number of employees, the nature of their work, and their financial history. The cost of the agreement will depend on several factors, such as the size of the business and the level of coverage required.
It`s important to note that a fidelity agreement does not replace other security measures, such as background checks or internal controls. Rather, it complements these measures by providing an additional layer of protection.
In conclusion, a fidelity agreement is a contract between an employer and an insurance company that protects the employer from financial losses caused by employee dishonesty. It can provide peace of mind to business owners and their customers, as well as serve as a deterrent to potential fraudsters. If you`re a business owner, it`s worth considering whether a fidelity agreement can help protect your company and its assets.