For what reason might a business need to purchase a fidelity bond?

A business might need to purchase a fidelity bond primarily to ensure against loss from an employee's fraudulent act. Fidelity bonds are specifically designed to provide coverage for losses resulting from dishonest acts committed by employees, such as theft, embezzlement, or fraud. This type of bond acts as a safeguard for businesses against the financial impact of such unethical behavior, helping to protect the company's assets and maintain its financial stability.

Fidelity bonds differ from other types of insurance, such as general liability or property insurance, which focus on different types of risks, including accidents, injuries, or property damage. Knowing the specific purpose of a fidelity bond highlights its importance in a business's risk management strategy, particularly in industries where employees handle significant amounts of cash or sensitive information.