Do I Need Crime and Fidelity Bonds? What’s the Difference?
Running a business comes with risks, but few are as damaging as financial fraud. Whether it’s an employee siphoning funds or an external hacker breaching your systems, financial losses due to dishonesty can be devastating. The good news? Crime and fidelity bonds can provide an essential safeguard, helping businesses recover from theft, fraud, and embezzlement.
But what exactly do these bonds cover, and does your business need them? Let’s break it down.
What Are Crime and Fidelity Bonds?
Both crime and fidelity bonds protect businesses from financial losses due to fraud, but they cover different types of risks:
Crime Bonds
Crime bonds protect against a wide range of criminal activities, including:
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Employee theft – Unauthorized cash withdrawals, skimming from accounts.
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Forgery & check fraud – Altered or fake checks written against your business.
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Funds transfer fraud – Cybercriminals tricking your company into wiring money to fraudulent accounts.
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Burglary & robbery – Loss of money, securities, or property due to theft.
Example: A restaurant owner discovers that a hacker has infiltrated their point-of-sale system, siphoning thousands of dollars in small transactions from customer payments. A crime bond helps cover the stolen funds.
Fidelity Bonds
Fidelity bonds specifically cover dishonest acts committed by employees that result in financial loss, such as:
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Embezzlement – Employees misappropriating company funds.
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Theft of client assets – If your business handles money or assets for clients, this bond provides protection.
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Fraudulent financial transactions – Employees manipulating financial records for personal gain.
Example: A CPA firm discovers that an accountant has been diverting client payments into a personal account for over a year. A fidelity bond helps compensate for the losses.
Who Needs Crime and Fidelity Bonds?
If your business handles cash, sensitive financial data, or client assets, crime and fidelity bonds are critical. They provide financial protection and peace of mind in industries where fraud and theft risks are high.
Industries That Benefit the Most:
✔ Professional Services – Law firms, accounting firms, and consulting businesses handling client funds.
✔ Retail & Hospitality – Businesses dealing with cash transactions, such as restaurants and stores.
✔ Healthcare & Medical Practices – Organizations processing insurance claims and patient payments.
✔ Construction & Contracting – Companies managing large payments and subcontractor funds.
✔ Financial Institutions – Mortgage brokers, investment firms, and credit unions.
Ask Yourself:
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Do I process large financial transactions regularly?
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Do my employees have access to company or client funds?
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Could my business survive a major financial theft?
If you answered yes to any of these, crime and fidelity bonds should be part of your risk management strategy.
FAQs: Crime and Fidelity Bonds
Q: Are crime and fidelity bonds the same as business insurance?
A: No. Business insurance generally covers external threats like property damage or liability. Crime and fidelity bonds specifically cover financial losses from fraud and dishonesty.
Q: Is a crime or fidelity bond required by law?
A: Some industries, such as finance or government contracting, require certain bonds. Even if not required, having them can protect against unexpected losses.
Q: How much coverage do I need?
A: It depends on your business size, transaction volume, and employee access to funds. An agent can help assess your risks and recommend coverage limits.
Q: How much do these bonds cost?
A: Pricing varies based on coverage amount and industry risk level. Many bonds cost a few hundred dollars annually—a small price compared to a six-figure loss.
Protect Your Business Today
Financial fraud happens more often than many business owners realize. Whether it’s internal employee theft or external cyber fraud, crime and fidelity bonds provide a crucial safety net.
At Schneider Insurance, our Producers—Hunter and Zach—are ready to help you assess your risks and find the right coverage. Contact us today to discuss how crime and fidelity bonds can safeguard your business from financial loss.
