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Employee Theft Bond

Guide to Employee Theft Bonds

Are all of your employees ethical and trustworthy? Do they have access to valuable and expensive company assets? Do your employees work directly with customer property? Although we don’t live in Utopia, we do want to think the best of our employees. However, there are some bad apples who might take advantage of your business or customers when no one is looking. To help protect yourself from employee theft followed by possible bankruptcy, you should bond your employees. Here is a short guide that explains how employee theft bonds work and the various types of these bonds that exist.

What Are High-Risk Job Positions?

Any employee who has access to valuable company assets could be a potential theft risk. This includes access to automobiles, expensive equipment and, of course, cash.

Benefits to Businesses

Employee theft bonds are an expense for businesses, but the benefits outweigh the costs. They are a great marketing tool for attracting customers, especially if the business works in customers’ homes. Customers feel more comfortable hiring a business that guarantees to protect their money and property while on the job.

There is also a significant benefit for recent start-ups. A newly founded business generally does not have a lot of time to accumulate wealth, so it would be likely to fail if an employee steals a significant amount of money. An employee theft bond can reduce the risk of a business failing due to employee theft, because the business would be reimbursed for their loss.

Bond from the Beginning

Employees should be bonded from the moment they are hired. If an employee cannot be bonded due to past theft or other fraudulent activities, it is a good way to sift through candidates to find trustworthy workers.

Employees do not have to know they are bonded, but it’s a good idea to let potential candidates know they might be. Depending on the type of employee theft bond, your company will be protected from loss due to any specific employee theft or collusion among many employees.

How to Bond Against Employees

Many insurance companies provide employee theft bonds that can be purchased through an insurance broker. Brokers have a list of products from several insurance companies that they use to determine which company can provide the best coverage for the best price.

There are three primary types of employee theft bonds:

Name Schedule Fidelity Bond
This bond covers a designated list of employees you provide to the insurance company. Whenever you add or change employees, you simply update the insurance company with the new names. Collecting from a claim on this type of employee theft bond requires absolute proof that a specific employee on the schedule actually stole from you.
Blanket Position Bond
This type of employee theft bond provides blanket protection over a certain position rather than a list of employees. All employees who work in the designated position(s) are covered, and new employees are added automatically. Claims do not require absolute proof that a specific individual committed the stealing.
Primary Commercial Blanket Bond
This type of employee theft bond is much like the blanket position bond except that it covers each employee in your company. And whether one or more employees committed the stealing, you are able to claim a loss for the same amount.

Employee theft bonds are important for businesses to protect themselves against financial loss. Though there are ways you can prevent loss, such as setting up strict job guidelines, checklists, and cross verification, an employee theft bond is added security for times when employees find a way to beat the system.