Fidelity Bond Coverage
You need to hear the truth… you have a one-in-THREE chance that at least one employee is stealing from you.
You heard that right. ONE in THREE.
It may even be your most trusted, loyal and ‘devoted’ employee. Those 1 in 3 odds are not in your favor. This is why you might need fidelity bond coverage.
We’re going to tell you some of the #1 ways they go about it.
First, let’s find out a few reasons they may do it in the first place.
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The Dishonest Walk Amongst Us
Face it, theft from your business has probably already happened. Oh, you think your employees all love you? That they would never do that to you? Don’t be naive.
Most employees are straight but all it takes is one. They can steal hundreds or thousands of dollars from you. We’re not talking petty pencil and paper clip theft here. MILLIONS of dollars have been scammed away from companies by employees with sticky fingers.
For instance, you could have an employee who secretly loathes you. He thinks you don’t pay him enough and thinks you are a jerk. (Actually, if we’re honest, you can be sometimes. : D) The guy thinks you’re too demanding and he doesn’t get the respect he deserves.
All he sees is that you’re ‘rich’, driving around in that fancy car living the good life. He feels he deserves it too. He has a family to support. He’s underpaid and overworked and it pisses him off. Of course, he would never tell YOU these things.
Other people just do it to see if they can get away with it. Some do it out of necessity, in their eyes. For most, there is a sense of entitlement and they don’t think they are hurting anyone.
(But watch and see how HE reacts when someone steals from HIM!! Jerkoff.)
What Are Some Of The Ways Employees Steal From Employers?
You might think to yourself, “I would know if anyone was stealing from me”. Don’t count on it!
There are many ways to do this, not just taking cash from the drawer. The scary thing is, in their mind, stealing from you is perfectly justified.
They might think you’re too dumb to even notice. Over the years they have created a few methods of doing it. Here are just a few examples:
- They can submit phony expenses or the same expense receipt multiple times. Then they bag the money for themselves. This is one of the most common ways employees do it.
- Before merchandise gets inventoried and put on the shelves, they steal it.
- They have another employee clock in early for them and vice versa, stealing company time.
- Because they are involved in accounting at your company, they can set up a fake vendor account, write checks to them then deposit the checks into their own personal account.
These are some of the ways employees could be scamming you and stealing from your company. It’s estimated that employees steal between 20 and 50 BILLION dollars every year due to fraud or theft. The average that a company loses from this is 5% of their revenue. Sometimes it’s more, sometimes it’s less.
Think it’s not going to happen to you? We wouldn’t recommend taking that chance. Don’t forget… 1 in 3.
What The Hell Is “Fidelity Bond Coverage”?
Here’s the deal… It’s what will cover your butt if you find out that Jimbo has sticky fingers.
In other words, it’s insurance that will reimburse you for lost funds or property from a dishonest employee. It will also cover if your customers suffer financial loss because of your butthead employee. (Hey, you hired him!)
It doesn’t matter where the employee works. He/she could be on the showroom floor, in accounting or in your customer’s homes.
Here are a couple of examples of how you can be in trouble if you don’t have fidelity bond coverage:
Jenny: The Way-Too-Everything Maid
For example, say you operate a home cleaning business. You have 30 employees working in your customer’s homes.
A business services bond (sometimes called a janitorial bond) will cover your company in case Jenny has a thing for other people’s jewelry. (And, you’re about to find out that she does.)
This is a little different coverage than a surety bond, but it still protects you from dishonest employees.
Unbeknownst to you, she tends to help herself when no-one is looking. This is easy to do in her position. She works alone!
One day, one of your regular homeowners discovers that she’s missing $85,000 in jewelry. Uh-oh.
The best part? Little miss priss Jenny quit (well, she just didn’t show up) weeks ago. Do you have that money laying around to reimburse the homeowner? Didn’t think so.
Up. Sh*t. Creek.
You’d better get fidelity insurance coverage.
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Robert, The Office Do-Gooder Douche
Robert Sullivan has been with you for 15 years. He keeps quiet, he does his job and shows up on time. He is a ‘model’ employee. The dude brings doughnuts for everyone on Fridays. He always has a goofy joke or a pun coming out of his mouth every time he opens it. He’s a pretty happy (but it’s kind of annoying) guy.
What you DIDN’T know is that for all 15 years he’s secretly been stealing money from you. (Hence, the reason he’s been so happy)
Well, he is in charge of ordering supplies for your company. Robert would regularly over-order supplies. Then without you knowing, he returned what was not needed in exchange for a gift card.
He would then make a very small purchase with the gift card then take the rest out in cash. Sneaky little devil. Over his 15 year employment, he stole around $300,000 from your company. That’s a lot of gift cards.
Wouldn’t it be nice to get that cash back? Fidelity bond, baby.
Tips on stopping employee fraud– You’re welcome.
Employee Dishonesty Bond – Another Name for Fidelity Coverage
So, despite its name, a fidelity bond is solely an insurance policy. It’s neither tradable nor can it accrue interest like a regular bond. It is also known as an ‘honesty bond’. (Come on people. Why ya gotta make it confusing???)
They SHOULD have called it “employee dishonesty bond” or “jackass employee insurance”.
How about “sticky finger insurance”?
Ok, enough. Moving on.
How Much Is Fidelity Bond Insurance Gonna Cost Me?
What’s the bottom line? As you can probably guess, your fidelity bond cost depends on a few factors.
It matters what type of business you run, how many employees you have, and the type of customers you serve. For example, a small consulting firm may purchase $1 million in blanket coverage and have an annual premium of less than $2,000.
Another business that covers 50 employees may pay almost $4,000 per year. Your coverage amount and deductibles play a heavy role in what this is going to cost you. Often, a bond will cost anywhere from .5 percent to 1 percent of the coverage you purchase.
Shopping for fidelity bonds is the same as with any other commercial insurance policy. You really need to get multiple quotes to see who has the coverage you need. At the rates you want to pay, of course. The deal is, can you afford NOT to have it?
Here’s an article if you think ours sucked. (We won’t judge.) Yes, it’s also about Fidelity Bond Coverage.
So What Do I Do Now?
In conclusion, using Hiscox’s online form to request quotes is the ‘raddest’ way to comparison shop fidelity coverage policies.
One simple online form gets you quotes from multiple top insurance carriers very quickly, saving you a lot of time and energy.
And that’s something you need. Because you have a business you’re running. Now go getcha some!
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Make sure your business has the right coverage. Check out other types of business insurance