money sectionmoney sectionA fidelity bond is a form of business insurance. Employers usually purchase a fidelity bond to protect themselves from any loss of money or property incurred as a result of hiring high-risk job seekers. A fidelity bond protects employers against employee dishonesty, theft or embezzlement. This type of insurance coverage enables employers to hire qualified job applicants otherwise considered "at risk" due to their past life background. Since the program's inception in 1966, in the state of Illinois, over 40,000 fidelity bonds have been issued.
A fidelity bond is effectively an insurance policy taken out by an employer that protects against crimes committed by employees. An ERISA bond is a specific type of fidelity bond that covers the handling of employee benefit plans. While getting a fidelity bond is usually a purely commercial decision, many organizations are required to hold an ERIS bond.
Although the terms "surety bond" and "fidelity bond" are often used interchangeably, the circumstances when each is used are quite different. A surety bond is used to guarantee compensation when someone fails to perform as promised, such as a contractor failing to complete a construction project. A fidelity bond is used to cover business losses due to fraud or dishonesty, such as employee theft, robbery or burglary. The requirements for both bonds are based on the applicant's financial condition and good character.
