Q: What is the difference, if any, between a crime policy and a fidelity bond?

Response 1: It depends on the policy forms but a fidelity bond implies narrow coverage for acts of theft and fraud by employees in the scope of their work for their employer. A commercial crime policy typically includes coverage for employee crimes, as well as diverse coverages for crimes of others interacting with the insured entities that cause loss to the business. Crime policies typically have many optional insuring agreements that provide much broader coverage than fidelity policies.

That being said, some folks use the terms interchangeably—though that is improper to many industry professionals.

Response 2: A fidelity bond is only employee dishonesty coverage. And, in that form, if the employee receives the stolen money in their regular compensation, such as in a commission statement or a paycheck, it is not covered. One example is an accounting employee who illegally increases their rate of pay above the authorized amount.

A crime policy can cover several different types of crime coverages. A commercial crime policy can offer more varied and better tailored coverages than the coverage provided by a fidelity bond.

Response 2: A short, simple and totally inadequate answer is that a crime policy protects the insured from a range of criminal acts committed by third parties that illegally convert the insured's cash, securities or negotiable instruments. A fidelity bond establishes a limit of indemnity available to third parties for actions committed by the employees of the indemnitor and is available through surety.

Response 3: There are many articles on this topic out there, including this one from Community Association Management, “What is Crime and Fidelity Insurance?" The companies you represent could provide you with good material, which would have the advantage of illustrating any quirks of their programs.

Response 4: A blanket fidelity bond is coverage for employee theft of money, securities, or property, written with a per loss limit rather than a per employee or per position limit, according to the International Risk Management Institute (IRMI).

A crime policy includes employee dishonesty or employee theft and, depending on the form, includes fidelity coverage within the employee dishonesty and theft coverage. Fidelity is essentially an older term for employee dishonesty and theft.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.

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