What does a fidelity bond provide coverage for?

A fidelity bond specifically provides coverage against losses incurred through dishonest acts committed by bonded employees. This type of insurance, often utilized by businesses, protects against theft, forgery, and various forms of employee dishonesty that can directly lead to financial losses. It is designed to give employers peace of mind by making sure that, in case of such fraudulent activities by employees, they can recover some of the losses experienced.

The other options present scenarios that are not covered by a fidelity bond. For instance, losses due to natural disasters fall under different types of insurance such as property insurance, while inventory shrinkage could relate to various factors including theft or mismanagement but is not solely covered by a fidelity bond. Equipment failure usually has its own specific insurance policies. Thus, the fidelity bond’s focus is uniquely on dishonest acts, distinctly separating it from other forms of coverage.