What is a fidelity bond used for in a business context?

A fidelity bond is specifically designed to protect a business from losses incurred due to dishonest acts committed by employees. This can include theft, fraud, or embezzlement. By securing a fidelity bond, a business ensures that it is financially protected against the potential repercussions of such dishonest behaviors, thereby instilling confidence in both the business owner and its clients regarding the integrity of its operations.

In contrast, the other options cater to different types of business risks. Insuring against property damage relates to physical assets and structures, while guaranteeing the performance of contractors pertains to the completion and quality of work performed by subcontractors and other service providers. Business interruption coverage protects against the loss of income during periods when business operations are halted due to unforeseen events. Each of these areas addresses distinct facets of risk management within a business, while fidelity bonds focus specifically on employee dishonesty.