Fidelity Bonds in Vermont

What are fidelity bonds?

Businesses trust their employees to responsibly handle funds and assets, but sometimes a little extra assurance is needed. Fidelity bonds may give Vermont businesses the added assurance that they need.

Fidelity bonds are special insurance products that help protect against employee theft or misconduct that results in significant financial loss. The bonds might protect financial or other assets.

What Vermont businesses need fidelity bonds?

ERISA generally requires businesses with pension plans to have fidelity bonds, and Vermont legislation may require bonds when hiring fiduciaries. Bonds can be purchased even if not required.

Businesses that have pension plans, employ fiduciaries or have significant assets can get guidance by talking with an agent who specializes in bonds. A knowledgeable agent will be able to review a business’s situation and make any appropriate bond recommendations.

How are fidelity and surety bonds different?

Fidelity and surety bonds are often grouped together when discussing these products, but they provide distinct protections:

Fidelity insurance bonds normally provide protection in a two-party agreement, most often an employer-employee arrangement
Surety bonds normally provide protection in a three-party agreement, most often in case a contract isn’t fulfilled

Are there different types of fidelity insurance bonds?

Businesses can purchase several different types of fidelity insurance bonds, each of which is designed for particular risks and situations. Three of the more common types of fidelity bonds are:

ERISA Bonds: The Employee Retirement Income Security Act generally requires businesses that have pension plans to carry a fidelity bond equal to 10% of the plan’s assets. The bond may provide protection against employee embezzlement, and it usually comes with no deductible.
Business Service Bonds: Businesses that send employees into customers’ homes or businesses could be responsible for anything that’s lost while the employee is there. Business service bonds might cover employee theft of customers’ possessions.
Dishonesty Bonds: Dishonest bonds might protect against employee theft of company finances or assets. Terms typically can be adjusted according to the value of a business’s assets, and the amount of access employees have.

Most dishonest bonds provide either blanket coverage or scheduled coverage. Blanket coverage usually covers all employees for the same amount and is often used by large businesses and businesses with high employee turnover. Scheduled coverage usually covers specific employees for different amounts, and is often used when employees have varying levels of responsibility.

An insurance agent who specializes in bonds can help businesses find ERISA, business service and dishonesty bonds that provide the terms needed for a situation.

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Can employees purchase fidelity insurance bonds?

Businesses most often purchase fidelity insurance bonds, but they are frequently also available to fiduciary and other employees. Employees might want to purchase their own bonds so that they’re well protected. This is something that an experienced agent can assist with.

Professionals who work as independent contractors typically can’t purchase fidelity insurance bonds, even if they take on fiduciary responsibilities.

How much are rates for fidelity insurance bonds?

Because fidelity insurance bonds offer fairly specialized protection, premiums for these are typically quite affordable for the amount of protection they provide. The amount of protection purchased, deductibles chosen and number of employees normally influence premiums.

An independent agent who assists with bonds can help businesses compare what rates different insurance companies will offer.

How can Vermont businesses get fidelity bonds?

For help purchasing a fidelity insurance bond, contact the independent insurance agents at Paige & Campbell Insurance. Our agents have assisted many Vermont businesses with fidelity bonds, and we’re ready to help you too.

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