Fidelity & Surety Bonds
When starting a business, the need for Surety and Fidelity Bonds is often immediate. If the business is growing, the need may be even greater. Surety Bonds are required if it’s a contractor business such as an electrician or plumber. The state of Florida may also require a Surety Bond, depending on the business, to guarantee payment of state sales tax and environmental protection. Notary public’s are also required by the state to post a Surety Bond. A Fidelity Bond offers specific protection against employee theft and limits the liability that may be incurred. A blanket Fidelity Bond will serve a growing business by immediately covering all newly hired employees.

Surety Bonds serve as a three-party written agreement between the business owner, known as the Principal, the party for which the business owner is working, the Obligee, and the company backing the commitment to do the work, the Surety. Much like other forms of insurance, they cover a variety of circumstances. There are Public Official Bonds required of those elected or appointed to government office that assure “honest and faithful performance” while in office. There are Probate and other Court Bonds that are posted by those in defense of legal actions against them. The Miscellaneous Surety Bonds are a catchall for private and public businesses that don’t fit into any other category.

Unlike a Surety Bond, a Fidelity Bond is not a business requirement but makes solid business sense to own. These bonds are strictly covering the employees of the company, not any vendors or contractors used by the company. Those individuals should carry their own bonds. While Fidelity Bonds do not cover accidents caused by employees or absenteeism, they do cover damage caused by negligence or malicious intent. They also protect against theft or fraud. Any intentional damage brought on by a disgruntled employee such as arson is also covered. Typically, Fidelity Bond coverage is between $5,000 and $25,000 although like other forms of insurance, amounts are determined by the owners and their value reflected in the premiums.

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