What is a 'fidelity bond' designed to protect against?

A fidelity bond is specifically designed to protect businesses from financial losses caused by employee theft or dishonesty. This means that if an employee engages in fraudulent activities, such as embezzlement or stealing company assets, the fidelity bond provides a safety net for the employer by covering the losses incurred. This type of bond is crucial for businesses that handle significant amounts of cash or valuable goods, as it mitigates the risks associated with potential dishonesty from within the organization.

The other options represent different types of risks not covered by a fidelity bond. For example, natural disasters, liability claims from customer injuries, and product failures are all addressed by separate types of insurance policies, such as property insurance, liability insurance, and product liability insurance, respectively. Each of these options pertains to distinct aspects of business risk management, highlighting the specialized nature of fidelity bonds in guarding against employee-related financial misconduct.