When it comes to business, trust is a number one feature. The reputation of companies is built upon the trust and fairness of their employees and is based on ethical conduct. Nevertheless, employee disloyalty can surface occasionally, posing a threat of losses and reputation damage to the business. Dishonesty bond insurance comes in as an insurance policy against these threats.
Understanding Dishonesty Bond Insurance
Dishonesty bonds are insurance designed to protect businesses from the financial consequences of employee dishonesty like stealing, fraud, or embezzlement. Such bonds allow recognition of the expenses incurred as a result of the fraudulent activities of their staff.
How Dishonesty Bonds Work
When businesses agree with an insurer, they buy dishonesty bond insurance, which means that the insurance provider covers the company in case of any dishonesty. If an employee commits fraud, causing financial losses, the business may initiate a claim with the insurer. Once the claim is verified, the insurer will pay the company up to the amount indicated by the bond limit.
Types of Dishonesty Bonds
Business Service Bonds
They are also known as business bonds or janitorial service bonds. They safeguard clients against erring staff who may visit their establishments. For instance, if an employee sent to a customer’s home steals a computer, the bond would refund the loss to the client.
Employee Dishonesty Bonds
Such bonds defend businesses and their users in the case of any employee who steals confidential information like Social Security numbers or banking details.
ERISA Bonds
As a part of the Employee Retirement Income Security Act (ERISA) of 1974, trustees of pension plans are supposed to have bond coverage at least equal to 10% of the plan’s total assets value. This rule is intended to prevent individuals who manage 401(k)s and other retirement plans from stealing or taking advantage of plan beneficiaries.
Conclusion
Dishonesty bond insurance is an imperative tool for controlling the dangers of employee dishonesty. Get in touch with a trusted surety company like S Philips Surety & Insurance Services, Inc., to get assistance.