Fidelity Bond Cost Calculator

About the Fidelity Bond Cost Calculator

Fidelity bonds (also called employee dishonesty coverage or commercial crime insurance) protect your business against financial losses caused by dishonest acts of employees — theft, embezzlement, forgery, and fraud. ERISA also requires fidelity bonds for employees who handle retirement plan assets.

This calculator estimates fidelity bond premiums based on the desired coverage limit, number of employees, industry risk, and whether you have internal controls like audits and separation of duties. Businesses that handle cash, financial assets, or customer property face the highest risk.

This is an educational estimate only. Actual fidelity bond pricing depends on specific business operations, internal controls, claims history, and carrier underwriting guidelines. Consult an insurance professional for carrier quotes.

When This Page Helps

Employee theft costs U.S. businesses an estimated $50 billion annually. The typical fraud case lasts 18 months before detection and costs $150,000+. Fidelity bonds protect against this risk, and ERISA requires them for certain benefit plan fiduciaries. This calculator helps you estimate the cost of protection.

How to Use the Inputs

1. Enter the desired fidelity bond coverage amount.
2. Enter the number of employees.
3. Select whether your business handles significant cash or financial assets.
4. Indicate whether you have internal controls (audits, separation of duties).
5. Review the estimated annual premium.

Example Calculation

Tips & Best Practices

• ERISA requires fidelity bonds of at least 10% of plan assets handled, up to $500,000 (or $1M for plans holding employer securities).
• Separation of duties is the most effective internal control — never let one person handle all financial functions.
• Blanket fidelity bonds cover all employees; scheduled bonds cover named positions — blanket is generally preferred.
• Higher coverage limits cost proportionally less per $1,000 of coverage.
• Regular financial audits can earn premium credits and catch fraud early.
• This is an educational estimate — consult an insurance professional for specific bond pricing.

The Employee Theft Risk

According to the Association of Certified Fraud Examiners, the typical organization loses 5% of revenue to fraud annually. Small businesses are disproportionately affected because they often lack formal internal controls. Fidelity bonds provide a financial safety net against this pervasive risk.

ERISA Bonding Requirements

If your business sponsors a 401(k), pension, or other employee benefit plan, ERISA requires fidelity bonds for plan fiduciaries. The bond must cover at least 10% of plan assets handled at the beginning of the plan year. Failure to maintain adequate bonding is a fiduciary breach.

Beyond the Bond: Internal Controls

A fidelity bond is essential, but prevention is better than recovery. Implement separation of duties (no one person controls all financial processes), require dual signatures on large transactions, conduct regular financial audits, perform background checks on financial employees, and review bank statements independently.

Frequently Asked Questions

• What does a fidelity bond cover?

  Fidelity bonds cover direct financial losses caused by dishonest employee acts: theft of money or property, embezzlement, forgery, computer fraud, and funds transfer fraud. They protect the employer (not the employee) from losses due to employee dishonesty.

• Is a fidelity bond the same as crime insurance?

  They're closely related. Commercial crime insurance is a broader policy that can include employee dishonesty (fidelity), plus coverage for third-party crimes like robbery, burglary, forgery by outsiders, and computer fraud. A fidelity bond is one component.

• Does ERISA require fidelity bonds?

  Yes. ERISA Section 412 requires every person who handles funds or property of an employee benefit plan to be bonded. The bond must be at least 10% of plan assets, with a minimum of $1,000 and a maximum of $500,000 ($1 million for plans holding employer securities).

• Who is covered under a fidelity bond?

  A blanket fidelity bond covers all employees automatically, including new hires. A scheduled bond covers only named individuals or positions. Blanket bonds are recommended because they don't require updating when employees change.

• How do I determine the right coverage amount?

  Consider the maximum amount any employee could steal before detection. Factor in the time between audits, access to financial systems, and checks/balances in place. Many businesses choose coverage equal to 3-6 months of cash flow.

• Do internal controls reduce fidelity bond premiums?

  Yes. Documented internal controls — separation of duties, dual authorization, regular audits, and background checks — can reduce premiums 10-20%. They also dramatically reduce the likelihood and magnitude of losses.