Fidelity bond: the best protection against dishonest employees
Por Victor Cegal
Still not widely adopted in Brazil, the fidelity bond covers companies for the loss caused as a result of crimes committed by their own employees against their property, including the expenses incurred in recovering money or property.
Under this unique form of property insurance, companies are protected from any loss caused as a result of robbery, theft, misappropriation or any other crime against the property defined by the Brazilian Criminal Code, whenever such crime is committed by one of their employees – bound to an employment contract.
Unlike the other types of property insurance – such as burglary & theft – the fidelity bond requires that the offender is an employee of the policyholder. So, if the crime is committed by a third party who is not an employee, then it will not be covered by the fidelity bond.
Insurance companies will usually require that a complaint is filed by or a police investigation commenced at the request of the policyholder against the dishonest employee in case of a crime committed during the term of the policy, or in case of the employee’s voluntary confession.
Today’s trends indicate that the risks of employee theft are increasingly higher. In this scenario, the fidelity bond can be a very good solution for companies that would like to – at the least – mitigate the loss caused to their property.