When the theft is an inside job.
Employee dishonesty bonds that protect your business and business service bonds that protect your clients, matched to what your contract or license actually asks for.
By Sam Alishahi · CA Insurance License #4348151 · Reviewed October 2026 · How this page is researched
Whose money is being protected?
A fidelity bond is insurance against theft by your own employees. The Surety & Fidelity Association of America explains that fidelity bonds started out as three-party surety bonds guaranteeing an employee’s honesty, and that today they’re two-party insurance policies, also sold as employee dishonesty coverage or as part of a commercial crime policy. It matters because standard commercial property insurance doesn’t cover business crimes like fraud or embezzlement, as the Insurance Information Institute points out.
The first question I ask is whose money is at risk. First-party coverage pays your business: Social Security Administration guidance describes a fidelity bond as covering only losses the insured suffers, with claims made by and paid to the insured. Bonds written for your clients go by names like business service bond or janitorial bond. The D.C. Department of Insurance, Securities and Banking describes janitorial bonds as three-party surety bonds that protect clients if your employees steal from your company or the property where they’re working. ISO’s 2022 commercial crime forms put employee theft of clients’ property under the same fidelity insuring agreement, where it used to take an endorsement. If the money belongs to a 401(k) or other employee benefit plan, that’s an ERISA bond, which has its own federal rules. I read the wording your client, licensing agency or plan is asking for, then match the bond to it.
- Employee dishonestyFirst-party: pays your business for money, securities or property your employees steal.
- Business service bondProtects your clients when an employee steals from the home or office where they work.
- ERISA bondProtects a 401(k) or other benefit plan against fraud or dishonesty by the people who handle its money.
- Surety bondA guarantee to someone else that you’ll do what you promised; you repay the surety for claims it pays.
What underwriters will ask
Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.
- Business: what you do and where your employees work.
- Bond wanted: employee dishonesty, business service, or the exact wording you were sent.
- Who requires it: a client contract, licensing agency or lender, and the amount they named.
- Employees: how many, and who handles money or works in clients’ homes.
- Hiring: whether you run background checks on new hires.
- History: current crime or bond coverage, and any theft losses.
Fidelity bonds, answered
What’s the difference between a fidelity bond and a surety bond?
A surety bond is a three-party guarantee: the surety backs your promise to someone else, and if it pays a claim, you have to pay it back. A fidelity bond is insurance against employee dishonesty. Sources describe it differently: IRMI still groups fidelity bonds with three-party bonds, while the Surety & Fidelity Association of America says fidelity bonds started out as three-party surety bonds and today are two-party insurance policies.
What is a business service bond?
It’s a bond written to protect your clients if your employees steal from them, and for cleaning companies it’s usually called a janitorial bond. D.C.’s insurance regulator describes janitorial bonds as three-party surety bonds between your company, whoever required the bond and the surety, protecting clients if employees steal from your company or the property where they’re working. That’s different from the two-party employee dishonesty coverage that pays your own business. California requires licensed home care organizations to carry an employee dishonesty bond that includes third-party coverage.
Is an ERISA bond the same as a fidelity bond?
It’s a fidelity bond with federal rules. The Department of Labor says it insures an employee benefit plan, such as a 401(k), against losses from fraud or dishonesty, must name or identify the plan, and can’t have a deductible on the amount ERISA requires. A plan can be added to a company’s crime policy only if that policy meets those rules, sometimes with an ERISA rider.
Who is required to have a fidelity bond?
It depends on the business. ERISA generally requires the people who handle a benefit plan’s money to be bonded, FINRA requires member firms that must join SIPC to carry a blanket fidelity bond, federal rules require federally insured credit unions to bond their employees and officials, and California requires one for licensed home care organizations. Client contracts can require one too.
Does a fidelity bond cover theft by the owner?
Generally not. Social Security Administration bonding guidance notes that fidelity policies don’t cover losses caused by owners or partners of the insured. Read how the bond defines an employee before you rely on it.
Do you offer fidelity bonds outside California?
Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in 48 states and Washington, DC and places policies there directly. In Florida and Washington, where Sam's licenses are still being issued, a partner agency in your state helps in the meantime. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.
Official sources
- Surety & Fidelity Association of America: What is a fidelity bond?
- Insurance Information Institute: Steps to reduce your vulnerability to theft
- IRMI: Bond (definition)
- IRMI: Employee dishonesty coverage (definition)
- IRMI: Major changes to the ISO commercial crime program
- D.C. Department of Insurance, Securities and Banking: Insurance coverage for a cleaning business
- Social Security Administration POMS GN 00506.105: Bonding and licensing guidelines (fidelity bond definitions)
- California Health and Safety Code 1796.37: home care organization license application (employee dishonesty bond)
- California Health and Safety Code 1796.42: home care organization requirements (employee dishonesty bond)
- U.S. Department of Labor: Field Assistance Bulletin 2008-04, ERISA bonding requirements
- FINRA Rule 4360: Fidelity bonds
- 12 CFR 713.3: Bond coverage a federally insured credit union must have
- Oregon Employment Department: Federal Bonding Program
Send what you were asked for. I’ll match the bond.
The contract or license wording, your headcount and who handles money are enough to start.
Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.
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