If you run a business in Tarrytown, New York, you may have heard of fidelity bonds and wondered if you need one. A fidelity bond is a type of insurance that protects your business from losses caused by dishonest or fraudulent acts of your employees. Fidelity bonds are especially important for businesses that handle money, valuables or sensitive information for their clients or investors.
What are fidelity bonds?
Fidelity bonds are different from surety bonds, which guarantee that a contractor will perform a specific task or service according to a contract. Fidelity bonds cover losses that result from employee misconduct, such as theft, embezzlement, forgery, fraud or sabotage.
How do fidelity bonds work?
Fidelity bonds work like any other insurance policy. You pay a premium to an insurance company, and in return, they agree to cover your losses up to a certain limit if an employee commits a dishonest or fraudulent act. The amount of coverage and the premium depend on several factors, such as the number of employees, the type of business, the level of risk and the claims history.
Why do you need a fidelity bond?
Fidelity bonds are not required by law in New York, but they are highly recommended for businesses that deal with money, valuables or sensitive information. For one, it protects your reputation and credibility. If an employee steals from your client or damages their property, it can ruin your relationship with them and harm your reputation in the market. A fidelity bond can help you restore trust and confidence with your clients by compensating them for their losses quickly and professionally.
It also protects your assets and cash flow. If an employee steals from your business or causes a large loss to your client, it can put a dent in your finances and affect your ability to operate. A fidelity bond can help you recover from the loss and avoid bankruptcy or legal action. If you have a fidelity bond, you do not have to worry about losing money or clients due to employee dishonesty. You can focus on running your business and growing it without fear of being betrayed by your staff.
It also attracts and retains quality employees. If you have a fidelity bond, it shows that you are a responsible and trustworthy employer who cares about your business and your clients. It also shows that you trust your employees and value their integrity. This can help you attract and retain loyal and honest employees who share your vision and goals.
Of course, just having a fidelity bond does not mean the bond will pay. And, if that happens, you may need to initiate litigation.