Fidelity Guarantee Insurance

Fidelity Guarantee Insurance is a policy that protects the employer against financial losses caused by fraud or dishonesty committed by an employee. It is designed to safeguard employers against losses that are not covered by general insurance policies for theft or burglary. While it does not ensure an employee’s honesty, it guarantees that the insurer will compensate the employer for any direct financial loss resulting from the employee’s dishonest actions, subject to the terms and limits specified in the contract.

Scope

The company agrees to indemnify the insured against any direct financial loss caused by the fraud or dishonesty of an employee under the following conditions:

  • The incident occurs after the policy starts.
  • The loss arises during the employee’s uninterrupted service with the insured, and is discovered during the policy period or within 12 months of its expiration.
  • If the employee dies, is dismissed, or retires, the loss is discovered within 12 months of such event, whichever happens first.

Key Benefits

  • Covers theft of funds committed by employees.
  • Protects business assets like property, stock certificates, and other valuables from employee dishonesty.
  • Covers loss of customer property due to dishonest employee actions.
  • Shields businesses from financial crises caused by dishonest employees, which can affect the entire company and its workforce.
  • Helps maintain the reputation of the business by ensuring transparency and accountability.

Coverage

The policy covers losses resulting from:

  • Dishonesty or fraud.
  • Loss of property.
  • Loss from loans or trading.
  • Forgery, embezzlement, and larceny.
  • Fraudulent conversion of money, goods, or services.

Exclusions

The policy does not cover losses caused by:

  • Concealment of facts affecting the risk at the time of policy issuance.
  • Changes in employment conditions without the insurer’s consent.
  • Multiple claims for a single employee.
  • Losses occurring outside India.
  • Losses due to failure to follow checks and precautions.
  • Losses from acts of dishonesty or fraud that were already noticed earlier.
  • Losses discovered more than 12 months after the policy or employee’s service ends.
  • Losses from stock-taking shortages or trading losses that were not caused by fraud or dishonesty.
  • Costs associated with proving the loss.
  • Consequential losses.
  • Legal defense costs.
  • Loss or damage to proprietary or confidential information.
  • Fraud or dishonesty by a known dishonest employee.

Claim Process

In the event of a loss, the following steps should be taken:

  1. Take immediate steps to minimize the extent of the damage or loss.
  2. Identify the cause of the loss and assess whether it is covered by the policy.
  3. Cooperate fully with the insurer and the surveyor to complete the survey and assess the loss.
  4. Provide necessary documentation such as claim forms, bills, and a copy of the policy.
  5. Keep damaged property safe until the surveyor or insurer advises on its disposal.
  6. Identify the subject matter insured.