What Do Fidelity Bonds Cover?
If staff handle company money, client property or benefit-plan assets, dishonest conduct can create losses to different owners. 3
Fidelity bonds and employee-dishonesty policies can help your business recover losses caused by dishonest employees, subject to the limits and terms you buy. 1Whose Property Is at Risk?
Identify whose property you want protected. Your company's cash, a client's equipment and an employee benefit plan's assets belong to different interests. If employees handle all three, have the quote identify the protection for each rather than relying on one employee-dishonesty amount. 3
| Interest | Ask the insurer |
|---|---|
| Your business’s money or inventory | Which business funds and inventory does this quote protect? |
| A client’s property | Which client property can your workers access, and is it included? |
| Benefit-plan funds or property | Which plan and asset handlers does the bond cover? |
Employee Benefit Plans
If you manage an ERISA plan, its fidelity bond protects the plan against loss from fraud or dishonesty by people handling plan funds or property. 2Who Needs Fidelity Bonds?
Consider fidelity protection when employees handle company funds or client property. Benefit-plan assets need their own bonding review. 4
Fidelity Bonds Coverage Examples
What happened
An Employee Takes Company Funds
An employee transfers company money to their own account without permission.
What happened
Someone Steals From a Benefit Plan
A person handling your employee benefit plan's funds is accused of stealing them.
How Do You Compare Fidelity Bonds Coverage and Costs?
People Included in the Coverage
Ask how the quote defines covered people, including temporary workers or contractors who matter to your business. 3Commercial Limits and Retentions
For commercial employee-dishonesty coverage, compare the limit per loss, any overall limit and the deductible or retention. 3What Exclusions and Conditions Should You Check in Fidelity Bonds?
Discovery, Reporting and Replacement
Ask when a loss must happen or be discovered and when you must report it, especially if you are replacing existing coverage. 3The Loss and Its Consequences
Check whether the quote addresses only the direct property loss or also costs and business losses that follow it. 3How Does Fidelity Bonds Compare With Related Coverage?
Fiduciary Liability
Fiduciary liability covers a different risk: alleged breaches of plan duties, rather than dishonest acts that cause a loss. 2Surety Bonds
A fidelity discussion concerns dishonest acts; a surety bond concerns a guarantee of an obligation to another party. 1What Do You Need for Fidelity Bonds Quotes?
Prepare the entities and locations to insure, employee information, property at risk, loss history and controls for handling money and inventory. 4Build an Exposure and Controls Summary
| Prepare | Ask the broker |
|---|---|
| Business entities and locations | Which entities and locations can this protection include? |
| Employees and other workers | Which people does the policy treat as covered? |
| Company, client and plan property | How does the quote address each owner’s property? |
| Money and inventory controls | What details about your current controls does the insurer need? |
| Loss history | What loss records and follow-up changes should you provide? |
Fidelity Bonds: Key Terms in Plain English
Direct Loss
The property loss itself, as distinct from indirect costs or business losses that follow it. 3
Frequently Asked Questions About Fidelity Bonds
Is a Fidelity Bond the Same as a Surety Bond?
No. Fidelity protection concerns dishonest acts. A surety bond guarantees an obligation your business owes to someone else. 1
Does an ERISA Fidelity Bond Cover Plan-Management Mistakes?
Can a Fidelity Bond Protect a Client’s Property?
It can, if client-property protection is included. Check whether the bond protects your business, a client’s property or an employee benefit plan; those are separate interests. 3
Does Fidelity Protection Include Temporary Workers and Contractors?
That depends on how the bond or policy defines the people whose dishonest acts are covered. Tell the broker which temporary workers and contractors handle money or property, and check those relationships against the wording. 3
More Fiduciary Liability and ERISA Bonds Questions
Is an ERISA Bond Required?
ERISA generally requires bonding for people who handle an employee benefit plan’s funds or property, subject to exceptions.
Is Fiduciary Liability Insurance Required?
ERISA generally does not require fiduciary liability insurance, but it may require a separate bond for people handling plan assets.
What Is Fiduciary Liability Insurance?
Fiduciary liability insurance covers certain claims alleging mishandling of duties connected with an employee benefit plan.
Does Fiduciary Liability Cover 401(k) Plans?
Fiduciary liability may cover certain claims involving a 401(k) if the plan and insureds meet the policy definitions.
Does Fiduciary Liability Cover Benefit Plan Mistakes?
Fiduciary liability may cover negligent benefit-plan administration, but routine corrections or amounts owed by the plan may fall outside coverage.
Does Fiduciary Liability Cover Breach of Fiduciary Duty?
Fiduciary liability is designed to cover certain claims alleging benefit-plan fiduciary breaches, subject to the policy’s terms.
Does Fiduciary Liability Cover ERISA Lawsuits?
Fiduciary liability may cover some ERISA lawsuits alleging a covered wrongful act, but not every claim or remedy.
Does Fiduciary Liability Cover Excessive Fee Lawsuits?
Fiduciary liability may cover an excessive-fee lawsuit alleging imprudent plan management, subject to policy terms and treatment of restitution.
Fidelity Bonds Guides by State
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Which Insurance Providers Offer Fidelity Bonds?
Sources for Fidelity Bonds
- Glossary of Insurance Terms. National Association of Insurance Commissioners; Fidelity; Surety Bond. Accessed 2026-09-16.
- Field Assistance Bulletin No. 2008-04: Guidance Regarding ERISA Fidelity Bonding Requirements. U.S. Department of Labor, Employee Benefits Security Administration; Q1–Q3 pp.2–3; Q2 pp.2–3. Version: November 25, 2008. Accessed 2026-09-16.
- Crime Terms and Conditions. Travelers Casualty and Surety Company of America; I.A.1–3 p.1; III.S pp.8–9; V.B.1–2 pp.18–20; CRI consideration p.1; III.P p.8; V.A.3 pp.16–17; V.A.4 p.17; V.B.3 p.20; IV.L p.15. Version: CRI-3001 Ed. 01-09. Accessed 2026-09-16.
- Commercial Crime Coverage Application. Travelers Casualty and Surety Company of America; I–III p.1; VI pp.2–3; XI p.4. Version: CRI-1100W-IND Ed. 01-09. Accessed 2026-09-16.