Fidelity Bond
What's a fidelity bond?
A fidelity bond is a sort of surety bond that protects a company and its customers from financial damage caused by the company's workers' illegal and dishonest actions. They're frequent among organizations that send staff onto a client's property, like janitorial services.
The fidelity bond guarantees that any cash lost due to employee theft, fraud, or embezzlement will be returned to the company's clients. Although bonds are not required, many businesses prefer to get bonded in order to increase their credibility and stand out to potential clients.
Unlike traditional surety bonds, which include three parties, fidelity bonds are more like insurance policies, with the insurance company and the insured forming a two-party agreement.
Fiduciary bonds come in a variety of shapes and sizes.
Many cleaning agencies may obtain a janitorial bond in order to reassure potential customers. If an employee steals from a client, the surety company will cover the loss (up to the bond amount), and the firm will have to reimburse the surety company.
Bonds under the Employee Retirement Income Security Act of 1974
Individuals who engage in employee benefit plans are protected by ERISA bonds, which are a sort of fidelity bond. The bonds make sure that the people in charge of employee benefit plans (called "fiduciaries") handle the money in an honest and responsible way.
What is the cost of a fidelity bond?
The cost of a fidelity surety bond is determined by the amount of coverage obtained and the number of employees employed by the bonded business. The company decides on a bond amount that will adequately protect its clients. Based on the number of employees, the surety company determines a premium rate (the proportion of the entire bond amount you pay as a premium).
The cost of an ERISA surety bond varies depending on the bond amount necessary and the type of assets maintained under the plan. Every employee benefit plan fiduciary is required to post a bond equal to 10% of the plan's assets. The bond amount is the value of the non-qualifying assets if the plan includes non-qualifying assets worth more than 10% of the plan's funds.
How do you get a fidelity surety bond?
To get a fidelity surety bond, you must first figure out what kind of bond you need and then apply online with a surety firm or agency.
Personal and business information such as names, addresses, social security numbers, and employee identification numbers will be collected by the surety company. Their bond underwriters will look at your financial health and use this information to decide how risky it is to give you the bond.
Following the approval of your application, you will receive a surety bond price that includes the bond premium. You pay the payment and the surety business issues you the bond if you accept the quote.
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