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10 Jun 2023
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Fidelity insurance is a crucial form of coverage that safeguards businesses against financial losses resulting from acts of dishonesty or fraud committed by employees. In India, where instances of employee misconduct can have severe implications, having fidelity insurance is essential.
Fidelity Insurance, also known as Fidelity Guarantee Insurance, is a specialised type of insurance that protects businesses from financial losses caused by dishonest acts committed by employees. It provides coverage against various fraudulent activities, including embezzlement, theft, forgery, misappropriation of funds, and other forms of employee dishonesty. Fidelity insurance is typically purchased by businesses to mitigate the risks associated with employee-related fraud. Claims are subject to terms and conditions set forth under fidelity insurance policy.
If you are a business owner or are someone tasked with protecting a business against any possible losses or damages consequential of the deliberate actions of a dishonest employee, a fidelity insurance plan can help you get the right type of coverage. Here are some of the common coverages offered by fidelity insurance:
Claims are subject to terms and conditions set forth under fidelity insurance policy.
Some of the common types of fidelity guarantee insurance plans available are:
This type of fidelity insurance coverage ensures that the organisation is protected against the dishonest acts of specific employees who may pose a higher risk.
In the event of a loss due to employee dishonesty, the organisation can file a claim under the collective policy to recover the financial damages suffered.
Floater fidelity insurance policies offer coverage for losses resulting from employee dishonesty that occurs outside the premises of the insured organisation.
This type of fidelity guarantee policy simplifies administration and ensures that the organisation is protected against the risk of employee dishonesty across the board.
With first-party coverage, the organisation can file a claim under the fidelity insurance policy to recover the losses suffered.
With third-party coverage, the organisation is safeguarded against claims and lawsuits brought by clients, customers, or other external parties who have suffered financial losses due to employee dishonesty. Claims are subject to terms and conditions set forth under fidelity insurance policy. Also Read: Different Types of General Insurance Policies
Before you buy a fidelity insurance plan, it is ideal to understand the exclusions, i.e., the conditions that lie outside the scope of the coverage of the plan. Here are some of the common exclusions of fidelity insurance. - Losses of the following kind:
- Legal liabilities - Any act committed by a fraudulent employee that was not discovered within 12 months of the date of cessation of the role of the person as an employee of the company - Expenses related to establishing the facts or details related to the matter - Claim may not be considered valid if: - The entity insured is engaged in another business - There are material changes in the matters or facts stated in the proposal submitted by the entity insured - The employee responsibilities and/or terms of service vary as compared to the relevant details stated in the proposal - The checks and precautions employed by the insured to ensure the accuracy of accounts and stocks are not as mentioned in the proposal Also Read: What Are The Two Main Types Of Health Insurance?
Fidelity insurance is vital for businesses due to the following reasons:
Fidelity insurance provides financial coverage and helps businesses recover from the financial impact of employee fraud or dishonesty.
Having fidelity insurance in place can help build trust among employees, as it demonstrates the organisation's commitment to protecting their interests and maintaining a safe working environment.
Some industries or regulatory bodies may require businesses to have fidelity insurance as a part of their compliance obligations.
Fidelity insurance offers peace of mind to business owners, knowing that they are financially protected against employee-related fraud risks. Claims are subject to terms and conditions set forth under fidelity insurance policy. Also Read: Top 5 Reasons Why We Need Insurance
The cost of fidelity insurance varies based on several factors, including the size of the business, the nature of operations, the coverage limits required, the number of employees, and the risk profile of the organisation. While you purchase a fidelity insurance cover, do not ignore on other Commercial insurance plans that are necessary for your business. Remember that such general insurance plans are essential to safeguard your financial interest, be it due to an employee dishonesty or other liabilities arising in the course of operations. Claims are subject to terms and conditions set forth under fidelity insurance policy. Also Read: Full-Coverage Car Insurance: A Comprehensive Guide *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
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