Dishonesty bonds vs. business service bonds — does your business need both?

Find out if you need a dishonesty bond, a business service bond, or both

It’s a sad fact of business life: employees steal. There are two kinds of employee theft a company needs protection against, and different surety bonds cover each one—dishonesty bonds and business service bonds.

It can be a confusing situation, because the term “fidelity bonds” is sometimes used to refer to both these bond types. A look at the two types:

Dishonesty bonds

The first type of theft is the kind where your workers rip off your company — they embezzle money, forge checks, pocket cash, commit computer fraud, sneak merchandise into their bags or steal company equipment. Dishonesty bonds protect your company against this type of employee theft.

Business owners in a wide variety of industries take out dishonesty bonds. Any type of business where a company bookkeeper, chief financial officer or accountant oversees the books or cuts checks would be wise to have a fidelity bond for that financial employee. If a shop owner has several employees who all ring up sales and use the cash register, the owner might be wise to have all those workers bonded as well.

Without a dishonesty bond, a small business could be devastated by a theft scandal. Lacking the resources to replace the stolen funds or merchandise, companies can go under. And small businesses are the most vulnerable to these types of thefts because they don’t have the resources for the costly security or theft-prevention programs used by bigger companies.

Business service bonds

The second type of employee theft takes place when you send your workers out to customer locations — an office building, private home, hospital or college campus. There, your workers may walk off with customers’ laptops, steal jewelry or cash, damage property, assault customers or commit other crimes.

Business service bonds are essential for any company that has workers on the job at customer locales. Common businesses where much of the work is done on-site include janitorial services, maid services, gardeners, exterminators, pool cleaners, security guards, carpet cleaners, painters, locksmiths, movers, pet-sitters, plumbers and appliance repairmen.

Fortunately, both dishonesty and business service bonds are fairly easy to obtain, and relatively inexpensive. Coverage amounts vary greatly from $5,000 to $100,000 or more, depending on your company size and situation. Bond terms offered may vary from one year to three years.

It’s important to note that in most cases, neither of these bond types will not pay off if you do not prosecute the employee involved in the theft. An arrest and/or conviction will be needed to prove the theft was real.

Purchasing dishonesty and business service bonds offers your company more than protection from worker theft. These bonds also have the added advantage of reassuring customers that you have vetted your employees, and have financial protection in case workers misbehave on the job.

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About the Author

Carol Tice
Business journalist Carol Tice has written for Entrepreneur Magazine, the Seattle Times, Dun & Bradstreet and many others. She is a frequent contributor to

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