Fearing Dishonest Employees? Consider Fidelity Bonds

Do you really know the people who work for you? Of course, you’ve read their resumes, done one or a few job interviews or even done a background check, but you don’t know the trials and tribulations they are going through as we speak. Most people are not bad at heart, but various life difficulties can force them to do irrational things. Fidelity bonds are a great tool for protecting your customers and your company from dishonest employees. They protect you from theft, embezzlement, forgery and many other fraudulent acts. How do fidelity bonds work? Employers usually decide to buy fidelity bonds when they hire high-risk employees. State and federal governments usually offer tax credit incentives to employers who decide to hire: Ex-offenders and candidates with police record; Ex-addicts who went through rehabilitation program; Individuals with poor credit score; Dishonorably discharged military veterans; Candidates with no work history. These incentives are good enough reason for employers to hire these types of candidates, especially when they can insure their business with an affordable fidelity bond coverage. A fidelity bond is a type of business insurance that protects the company and its customers from monetary and property theft. It is a two-party agreement between an employer and insurance or surety company, which guarantees a financial coverage of damages caused by employees’ misconduct or negligence. Where to buy fidelity bonds? You can buy these bonds from licensed companies that sell surety bonds. Before you decide which company to contact, you should use Google to check their: rates, turnaround time, indemnification requirements and file requests. Experts from JW Surety Bonds also point out that surety companies can be checked through their A.M. Ratings. These ratings are an established credit rating system which grades company’s stability. When choosing a surety company according to A.M. Ratings, you should always search for companies with grades that are higher than B+. Types of fidelity bonds Many surety companies offer bonds that are customized for specific businesses and positions. These are some of the most common fidelity bond types you can choose from: Business services bonds – protect your customers from employee theft. Many business owners post ‘bonded employees’ signs on their door, so customers don’t need to worry about this matter. Employee dishonesty bonds – protect employers from various types of employees’ dishonesty, including: embezzlement, misrepresentation, theft and forgery. Janitorial and cleaning bonds – are specifically customized for janitorial and cleaning services. Financial institutions bonds – are specifically customized for financial institutions’ employees, because dishonesty in these businesses can produce dreadful consequences. ERISA bonds – protect participants and beneficiaries of employee benefit plans from frauds. Liability bonds – protect your business from employee negligence. How much does it cost? The price of fidelity bonds depends on the type of business you run, type of customers you serve and the number of employees you have in your team. Bond coverage also plays a very important role in determining costs. Fidelity bonds usually cost from 0.5 to 1% of its coverage. How to file claims? If employee misconduct causes damages, you should report the incident to your surety company. You should file a claim even if you don’t have a proof that someone of your employees is responsible. Most companies have very short deadlines for claim reports, so you should contact them right away. Then, the surety company will launch an investigation in order to collect all the facts and decide whether your bond covers the damages caused by this specific incident. Fidelity bonds are great for protecting your small business, during its initial growth phase, when you need to hire new employees. You should never ‘judge a book by its cover’, but you also shouldn’t let dishonest and incompetent employees spoil your company’s reputation and slow down its development.