Hawaii Insurance License Practice Exam

Who is typically protected under a fidelity bond?

1. Clients

2. Employees

3. Employers

4. Contractors

The correct answer is: Employers

A fidelity bond primarily protects employers against dishonest acts committed by employees. This type of surety bond is designed to provide financial protection in the event that an employee engages in theft, fraud, or other dishonest behaviors that result in financial loss to the employer. The bond essentially acts as a safety net for businesses, ensuring that they can recover some of their losses caused by such misconduct. In addition to covering potential losses, fidelity bonds can also serve to build trust between an employer and its clients, as having this protection in place demonstrates a commitment to ethical business practices. While clients, employees, and contractors may have different interests in relation to the fidelity bond, it is the employer who is directly protected against financial loss resulting from dishonest employee actions.