Texas Property and Casualty License Practice Exam 2026 - Free Practice Questions and Study Guide

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What does a "fidelity bond" insurance protect against?

Injuries on the insured property

Losses attributed to employee dishonesty

A fidelity bond is a specific type of insurance designed to protect businesses from losses incurred due to employee dishonesty. This coverage typically applies to fraudulent acts such as theft, embezzlement, or misappropriation of funds by employees. The bond provides financial security to the employer, ensuring reimbursement for the financial harm caused by an employee’s dishonest actions.

This type of insurance is particularly important for businesses that handle significant amounts of money or valuable assets, as it safeguards their financial interests and can help maintain trust with clients and other stakeholders. Other forms of insurance, such as general liability or property insurance, do not provide this specific protection against the internal threat posed by dishonest employees.

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General negligence claims

Theft of property by external parties

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