What is "fidelity bond"

n. An insurance contract that covers an employer against loss due to fraudulent or dishonest employees.

A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees.

While called bonds, these obligations to protect an employer from employee-dishonesty losses are really insurance policies. These insurance policies protect from losses of company monies, securities, and other property from employees who have a manifest intent to cause the company loss. There are also many other forms of crime-insurance policies ( burglary, fire, general theft, computer theft, disappearance, fraud, forgery, etc.) to protect company assets.