A Fidelity Bond is a type of insurance bought by an employer. It is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts committed by employees which are not generally covered under normal theft circumstances. The insurance may be blanket bonds which apply to all employees or bonds for each employee on an individual basis. There are a few businesses (brokers, cash carriers, and security firms) which are required by law to acquire fidelity bonds.
There are two types of fidelity bonds: the first-party fidelity bonds and the third-party fidelity bonds. The First-party fidelity bond protects the business against intentionally wrongful acts committed by employees such as theft. A Third-party fidelity bond protects businesses against intentionally wrongful acts committed by the people who are working for them on a contract basis such as Lawyers.
The person who must be bonded is anyone deemed to be “handling” property of a plan or funds and could cause a loss of property or plan funds due to an act of dishonesty or fraud. Generally, anyone who has physical contact with cash or checks, power to transfer funds or negotiate plan property, authority to sign checks, and others related.
In the general sense, a bond amount equivalent to at least 10% of the amount he or she handles and must not be less than the amount of $1,000 or more than the amount of %500,000 or $1,000,000 for plans that hold employer securities. A Fidelity Bond is a straightforward document for binding purposes and a review list is provided to assist you in preparation and inform you about the document.
We, ____________________, as PRINCIPAL, and ___________________________, a surety company authorized to issue these bonds, as SURETY, are held and bound to __________________________ in the sum of $ ______ (____________ & _______/100 dollars) and the legal successors of __________________________, for which we bind ourselves and our legal successors.
The condition of this bond is that PRINCIPAL is employed by __________________________ as _______________________________ and is required to be bonded.
If PRINCIPAL shall account for all money and property and other items of value coming into PRINCIPAL’s possession or control as a result of employment, then this obligation shall be void, otherwise it shall remain in full force and effect.
This bond shall remain in force until terminated or canceled on ___ days written notice by SURETY by OBLIGEE.
This review list is provided to inform you about this document in question and assist you in its preparation. A Fidelity Bond is a straightforward instrument for bonding purposes.
1. Make multiple copies. Give one to each signer.
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