What does a fidelity bond cover?

A fidelity bond specifically provides coverage for losses that result from dishonest acts committed by employees or individuals in a position of trust within a company. This means that if an employee embezzles money, commits fraud, or steals property, the fidelity bond will cover the financial losses that arise from such misconduct.

This type of insurance is crucial for businesses as it helps protect against the risk of employee dishonesty, which can significantly impact a company’s finances and reputation. By having a fidelity bond in place, companies can mitigate their risks and provide assurance to clients and stakeholders regarding the integrity of their operations.

The other options pertain to different types of insurance. For example, defaults on contract payments would generally fall under business interruption or performance bonds, while property damage during construction is typically covered under general liability or builders' risk insurance. Injuries sustained on-site usually require workers' compensation insurance to cover medical expenses and lost wages. Each of these options serves distinct purposes not covered by a fidelity bond.