Corporate Finance For Dummies
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If you have employees who handle cash, insuring your business against theft through employee bonding is an absolute must. This insurance, called fidelity bonds, helps you protect yourself against theft and reduce your risk of loss. Employee bonding is a common part of an overall business insurance package.

If you carry a fidelity bond on your cash handlers, you’re covered for:

  • Losses sustained by any employee who’s bonded.

  • Losses to a client of your business due to an act of one of your employees. For example, if you’re a financial consultant and your bookkeeper embezzles a client’s cash, you’re protected for the loss.

Fidelity bonds are a type of insurance that you can buy through the company that handles your business insurance policies. The cost varies greatly depending on the type of business you operate and the amount of cash or other assets that are handled by the employees you want to bond. If an employee steals from you or one of your customers, the insurance covers the loss.

Employers bond employees who handle cash, as well as employees who may be in a position to steal something other than cash. For example, a janitorial service bonds its workers in case a worker steals something from one of its customers. If a customer reports something missing, the insurance company that bonded the employee covers the loss. Without a bond, an employer must pay back the customer for any loss.

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