Florida Contractor Practice Exam

Which of the following insurance policies would protect a company against employee embezzlement?

1. Blanket crime policy

2. Fidelity bond

3. Comprehensive theft

4. Comprehensive liability

The correct answer is: Fidelity bond

A fidelity bond is specifically designed to protect businesses against losses caused by dishonest acts of employees, including embezzlement. This type of insurance provides coverage for financial losses resulting from fraud, theft, or dishonesty of employees, effectively safeguarding the company from internal financial crimes. The fidelity bond holds significant importance in protecting the company's assets, as it assures employers that they will be compensated for any monetary losses caused by the wrongful acts of their employees. This type of insurance is essential for businesses that handle a considerable amount of cash or have employees in positions of trust, where there is a higher risk of embezzlement or theft. In contrast, other policies mentioned, such as a blanket crime policy, can cover a range of criminal activities, including employee dishonesty, but they may not focus exclusively on the embezzlement aspect. Comprehensive theft refers to coverage for theft of property but doesn’t specifically address the risks associated with employee actions. Comprehensive liability deals with a broader spectrum of liability issues, primarily concerning third-party claims, rather than protecting against internal employee fraudulent activities. Therefore, the fidelity bond is the most suitable choice for coverage against employee embezzlement.