What are fidelity bonds designed to protect against?

Fidelity bonds are specifically designed to provide financial protection against losses that result from the fraudulent acts or misconduct of employees. This includes theft, embezzlement, or forgery committed by individuals within the organization. The purpose of these bonds is to safeguard the employer against the financial implications of such dishonest actions, ensuring that the business can recover from the effects of employee wrongdoing.

In contrast to the other options, which deal with different aspects of business liability and risk management, fidelity bonds are concentrated solely on internal fraud. Employee health and safety violations pertain to regulatory compliance and workplace safety rather than financial misconduct. Customer property theft by external parties is typically covered under different types of insurance, such as general liability or property insurance, which do not encompass the actions of employees. General business liability claims mostly relate to negligence or injuries caused to third parties rather than fraudulent activities committed by employees. Thus, the focus of fidelity bonds on employee-related fraud distinguishes it from those other insurance types.