Fidelity Cover

1. What is Fidelity in a business organisation?

The bond of trust between an employer and employee & or for that matter in any commercial relationship- is the basis of effective functioning of an organization. The employees are Expected to be dedicated and work honestly for the interests of the organization. If black sheep among them acts otherwise, it may cause financial losses to this setup.

This protection against the act of a wayward employee is the subject matter of coverage under a standard fidelity guarantee policy. This is also provided as an extension of money insurance policy.

2. What is the insurance cover available?

The policy extension provides cover for a financial loss resulting from a fraudulent or dishonest act of an employee during the course of business, as detailed below.

What is covered

Generally the policy offers cover forward loss discovered within a defined period which could be:

An act committed within a period Extending back in time to the first date of taking such policy and continuously renewed thereafter ( the first date is called as the Retroactive date) and discovered

• During the current policy period or
• Within 12 months of the employee seizing to be an employee of the company

What is excluded

Some of the exclusions of the policy coverage are:

• The policy excess- a predefined amount in the policy which the insured is expected to bear; with the intention of enforcing a higher sense of responsibility
• A loss occurring earlier than the retroactive period or
• Discovered later than 12 months of expiry of The policy or exit of the employee
• Any consequential loss or liability rising due to this act of infidelity

3. Who should opt for this?

The general rule of an insured acting as prudent on insured applies to all insurance policies. so proper system of checks and balances as well as compulsory rotation of staff dealing with cash is an advisable step.

In addition of course one can and should opt for the fidelity extension in the policy covering money as defined in the policy.

Various options of coverage are available ranging from covering a specific employee or a specific function (like cash handling) or a generic cover for all employees dealing with financial matters on named aur unnamed basis.