Third-party fidelity bonds protect businesses against intentionally wrongful acts committed by people working for them on a contract basis (e.g., consultants or independent contractors).
In many cases, businesses in finance or banking require their contractors to carry third-party fidelity bond coverage to prevent losses from theft.
Despite the pervasiveness of this threat (the FBI estimated that between January 2015 and February 2017, over $3 billion have been lost by companies around the world to this scam),[6] most traditional insurance policies do not cover this type of loss.
[9] The industry has responded to these events by making an extension of coverage available but they are typically subject to additional premium, robust underwriting questions, and are often sublimited.
In the United States, various service providers to pension plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) are required to obtain and maintain fidelity bond coverage in prescribed amounts.