Employee Dishonesty Bond

Employee Dishonesty Bond premiums start at $100 per year for businesses with 5 or fewer employees at the $5,000 coverage level. The cost depends on two factors: the total number of employees and the coverage amount per employee. For example, a retail store with 10 employees seeking $25,000 coverage would pay approximately $265/year. Coverage ranges from $5,000 to $200,000, with the highest standard premium being approximately $1,035/year for 25 employees at $200,000 coverage. A 3-year prepaid option is available at 2.85 times the annual premium, providing savings over annual renewal. Companies with 26 or more employees should contact an independent agent for custom pricing. Different rates may apply in certain states.

Employee Dishonesty Bonds offer nine standard coverage levels: $5,000, $10,000, $25,000, $50,000, $100,000, $125,000, $150,000, $175,000, and $200,000 per employee. The coverage amount represents the maximum indemnity the surety will pay per employee for covered losses. Choose your coverage level based on the nature of your business and the degree of access employees have to money, merchandise, and property. Lower-risk professional offices may be comfortable with $10,000 to $25,000, while businesses handling significant cash or inventory should consider $50,000 to $200,000. For limits of $100,000 and above, additional underwriting information about audits and banking controls is required.

Yes. A 3-year prepaid bond is available at 2.85 times the annual premium, which works out to about 5% savings versus renewing annually for three consecutive years. For example, if your annual premium is $265, the 3-year prepaid premium would be $755.25 instead of $795. This provides continuous coverage without the need for annual renewal applications. Standard rates require no employee dishonesty losses in the last five years.

The premium is determined by a matrix based on: (1) the total number of employees to be covered, and (2) the per-employee coverage amount selected. This is blanket position coverage, so you must count ALL employees including both full-time and part-time workers. If owners or officers are to be covered, they must be included in the total count. The bond offers two business classifications—Class A for professional offices (lower risk) and Class B for businesses with more exposure (retail, food service, etc.). No credit check is required for standard applications.

An Employee Dishonesty Bond protects the insured business against loss of money or other property caused by the fraudulent or dishonest acts of its employees. The bond covers acts committed by any employee acting alone or in collusion with others. Coverage applies during the bond term and losses must be discovered before the bond expires or is cancelled. The bond is "blanket position" coverage, meaning every employee is covered—not just named individuals. Coverage extends to employees working in any U.S. state, the District of Columbia, Puerto Rico, the Virgin Islands, or temporarily elsewhere.

The Employee Dishonesty Bond does NOT cover: (a) Losses proven only by inventory computation or profit-and-loss computation (the loss must be traceable to a specific dishonest act); (b) Defense costs in legal proceedings brought against the insured; (c) Fees, costs, or expenses for prosecuting or defending legal proceedings; (d) Costs incurred by the insured to establish the existence or amount of a covered loss; (e) Losses involving independent contractors, brokers, factors, or commission agents (they are not "employees" under the bond); (f) Losses by directors or trustees who are not also serving as officers or employees of the company.

Class A covers professional and business offices such as accountants, architects, physicians, dentists, insurance agents, and attorneys. These are considered lower-risk because of the nature of their operations. Officers of corporations are not automatically covered unless they are in the regular service and compensated by salary/wages. Class B covers businesses with more exposure to employee dishonesty, such as cafes, gas stations, retail stores, businesses with salespeople, and courier services (excluding those handling cash and negotiable instruments). Class B (Form B) contains a criminal conviction clause, meaning the dishonest employee must be tried and convicted before a claim is paid. Class A or B designation is subject to underwriter discretion.

The criminal conviction clause (in the Form B bond) states that a "fraudulent or dishonest act" means an act which is punishable under the criminal code in the jurisdiction where it occurred, AND for which the employee is tried and convicted by a court of proper jurisdiction. This is a condition of coverage under the Class B (Form B) Employee Dishonesty Bond. The purpose is to protect both the business and its employees against unjustified allegations of dishonesty. A claim will only be paid after the criminal justice system has confirmed the employee's guilt.