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🔐 '''Fidelity bond''' is a form of [[Definition:Surety | surety]] or insurance product that protects a business against financial losses caused by the dishonest acts of its employees — including theft, embezzlement, forgery, and fraudulent fund transfers. In the insurance industry itself, fidelity bonds are both a product that carriers [[Definition:Underwriting | underwrite]] and sell, and a risk-management tool that [[Definition:Insurance carrier | insurers]], [[Definition:Insurance agency | agencies]], and [[Definition:Managing general agent (MGA) | MGAs]] purchase to safeguard their own operations. They should not be confused with [[Definition:Surety bond | surety bonds]] issued for contract or performance guarantees; fidelity bonds focus specifically on employee dishonesty and related perils.

⚙️ Fidelity bonds come in several forms. A blanket fidelity bond covers all employees of an organization up to a stated limit, eliminating the need to schedule individuals by name — this is the most common structure for financial institutions and large insurance operations. A scheduled bond, by contrast, covers only named positions or employees, which may be appropriate for smaller firms. The [[Definition:Underwriting | underwriting]] process evaluates the applicant's internal controls, audit practices, segregation of duties, and claims history. Some carriers extend coverage to include third-party service providers or [[Definition:Cyber fraud | computer fraud]], bridging the gap toward [[Definition:Crime insurance | commercial crime]] policies that bundle multiple dishonesty-related coverages into a single form.

🛡️ For financial services firms — including insurers, [[Definition:Insurance broker | brokerages]], and [[Definition:Premium finance company | premium finance companies]] — fidelity bonds are often a regulatory or contractual necessity. State [[Definition:Department of insurance | insurance departments]] and entities like [[Definition:Lloyd's of London | Lloyd's]] may require minimum fidelity bond limits as a condition of licensing or market access. Beyond compliance, the bond serves as a practical safety net: even well-run organizations with strong internal controls face residual employee dishonesty risk, and a single embezzlement event can threaten solvency for a mid-sized firm. As remote work and digital payment systems expand the attack surface for internal fraud, demand for robust fidelity coverage continues to grow.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Surety bond]]
* [[Definition:Crime insurance]]
* [[Definition:Employee dishonesty coverage]]
* [[Definition:Blanket bond]]
* [[Definition:Fiduciary liability insurance]]
* [[Definition:Internal controls]]
{{Div col end}}

Definition:Fidelity bond - Revision history

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