Fidelity Bonds: Pricing and Cost Considerations

Fidelity Bond Cost: Top 5 Tips for 2024 Savings



When safeguarding your business against employee theft or fraud, fidelity bond cost is a crucial consideration. Fidelity bonds—also known as employee dishonesty insurance—act as a safety net by covering financial losses due to dishonest acts by your staff.

Here’s the quick answer to the common question: “How much does a fidelity bond cost?”

  • Coverage Amount: Typically ranges from $5,000 to $10 million.
  • Cost Basis: Usually between 1-3% of the coverage amount annually.
  • Examples: A $50,000 bond can cost anywhere from $500 to $1,500 per year.

Understanding the ins and outs of fidelity bonds, including what influences their cost, helps in making a well-informed decision. Below, we’ll delve into fidelity bonds, their purpose, and how securing one could protect your business from financial harm.

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Understanding Fidelity Bonds

Fidelity bonds are a type of insurance that protects businesses from financial losses due to dishonest acts by employees. They are vital for businesses of all sizes and across various industries. Let’s break down the different types of fidelity bonds and what they cover.

Types of Fidelity Bonds

There are several types of fidelity bonds, each designed to address specific risks and needs:

  1. Employee Dishonesty Bonds
  2. Janitorial Services Bonds
  3. Business Services Bonds
  4. ERISA Bonds

Employee Dishonesty Bonds

Employee dishonesty bonds, also known as crime insurance, cover financial losses due to fraudulent activities by employees. These activities include:

  • Theft of money or property
  • Embezzlement
  • Forgery

These bonds are essential for any business where employees handle cash, financial records, or valuable assets. Small businesses, for instance, face significant risks of occupational fraud, making these bonds crucial for financial protection.

Janitorial Services Bonds

Janitorial services bonds protect clients from theft and dishonest acts committed by cleaning staff while on client premises. These bonds are particularly important for businesses offering services such as:

  • Cleaning services
  • Housekeeping
  • In-home care

For example, if a janitorial employee steals from a client’s home, the bond will cover the loss, fostering trust between the service provider and the client.

Business Services Bonds

Business services bonds are similar to janitorial services bonds but cover a broader range of services provided on client premises. These include:

  • IT consulting
  • Home health care
  • Contracting services

These bonds ensure that if an employee commits theft or fraud while working at a client’s location, the client is financially protected. This is crucial for maintaining client trust and securing contracts.


ERISA bonds are required for businesses that manage employee benefit or pension plans. These bonds protect against losses caused by fraudulent acts of fiduciaries handling these plans. Under the Employee Retirement Income Security Act (ERISA), companies must have a bond equal to at least 10% of the plan’s assets, up to a maximum of $500,000.

For example, if a fiduciary embezzles funds from an employee pension plan, the ERISA bond will cover the loss, ensuring that employees’ benefits are protected.

Understanding these different types of fidelity bonds helps businesses choose the right coverage to protect against specific risks. Next, we’ll explore the factors influencing fidelity bond cost.

Factors Influencing Fidelity Bond Cost

When it comes to fidelity bond cost, several factors play a significant role. Understanding these can help you make informed decisions about your coverage needs.

Coverage Amount

The size of the bond is the primary factor affecting its cost. The coverage amount can range from as low as $5,000 to as high as $10 million. Typically, the cost is a small percentage of the total bond amount. For instance, a $10,000 bond might cost around $100 annually, based on a 1% premium rate. As you increase the bond amount, the cost proportionally rises.

Industry Risk

Your industry significantly impacts the cost of a fidelity bond. High-risk industries like IT, financial services, or healthcare usually face higher premiums. These sectors handle large volumes of sensitive information and are more prone to employee fraud or theft. On the other hand, low-risk businesses will generally pay less.

Employee Access

The number of employees who have access to sensitive information also influences the cost. More access points mean higher risk, leading to higher premiums. It’s a good idea to limit data access where possible to keep costs down.

Sensitive Information

If your business deals with a lot of sensitive data—like credit card numbers, Social Security numbers, or medical records—you’ll likely pay more for fidelity bond coverage. The type and volume of data directly affect the risk of employee dishonesty, which in turn affects the bond cost.

Credit History

Your personal and business credit history is another crucial factor. A strong credit score can help lower the cost, as it indicates to the surety company that you’re a reliable candidate. Conversely, poor credit may increase the premium.

Credit History - Fidelity Bond Cost

Real-World Example

Consider a small tech startup with five employees handling sensitive customer data. If they need a $50,000 bond, they might expect to pay around $500 annually, assuming a 1% premium rate. However, if the same company had poor credit or operated in a higher-risk industry, the cost could be higher.

Understanding these factors can help you better manage your fidelity bond costs. Next, we’ll look at some specific pricing examples and cost breakdowns to give you a clearer picture.

Pricing Examples and Cost Breakdown

When it comes to fidelity bond cost, understanding the pricing structure is crucial. The cost of a fidelity bond primarily depends on the coverage amount, which can range from as low as $5,000 to over $10 million. Let’s break down the key elements that influence these costs.

Premium Rates

The cost of a fidelity bond is usually a small percentage of the total bond amount. For example, if a bonding company charges a 1% premium rate, a $50,000 bond would cost around $500 annually. This percentage can vary based on several factors:

  • Credit History: Companies with good credit scores can expect lower premium rates. Poor credit may result in higher costs.
  • Industry Risk: High-risk industries like finance or IT often face higher premiums.
  • Employee Access: More employees with access to sensitive data can increase the risk and, consequently, the premium.

Coverage Range

Fidelity bonds can cover a wide range of amounts. Here are some examples to give you an idea of the potential costs:

  • $5,000 Bond: With a 1% premium rate, this would cost around $50 annually.
  • $500,000 Bond: At the same rate, expect to pay around $5,000 per year.
  • $10 Million Bond: This could cost approximately $100,000 annually, assuming a 1% premium rate.

Annual Percentage

The annual percentage rate (APR) for fidelity bonds typically ranges from 0.5% to 10% of the bond amount. For instance:

  • Low-Risk Business: A business in a low-risk industry with excellent credit might pay as little as 0.5% of the bond amount.
  • High-Risk Business: A high-risk business with poor credit could pay up to 10%.

ERISA Bond Specifics

If you offer employee benefit plans, you may need an Employee Retirement Income Security Act (ERISA) bond. These bonds are required to cover at least 10% of the total plan assets, with a minimum of $1,000 and a maximum of $500,000.

For example, if your plan has $1 million in assets, you would need a bond covering at least $100,000. Assuming a 2% premium rate, this would cost around $2,000 annually.

Real-World Example

Consider a mid-sized healthcare company storing sensitive medical records. They decide to get a $500,000 fidelity bond. With a 1% premium rate, their annual cost would be around $5,000. However, if they had a history of employee dishonesty claims, their rate could be higher, potentially doubling the annual cost.

Understanding these pricing examples and cost breakdowns can help you better manage your fidelity bond expenses. Next, we’ll explore strategies to reduce these costs effectively.

How to Reduce Fidelity Bond Costs

Reducing your fidelity bond cost can be crucial for your business’s bottom line. Here are some effective strategies:

Limit Data Access

The more employees who have access to sensitive information, the higher your fidelity bond costs will be. By limiting access to only essential personnel, you can reduce the risk of employee theft and, consequently, lower your bond premiums.

Example: A small IT firm restricted access to client data to just three senior employees. This measure helped them reduce their fidelity bond cost by 15%.

Maintain a Clean Credit History

Your credit history plays a significant role in determining your fidelity bond cost. A clean credit history signals to bonding companies that you are financially responsible, which can lower your premiums.

Tip: Make timely payments on existing loans and reduce outstanding debts to improve your credit score. This can lead to lower bond costs over time.

Implement Proper Internal Controls

Having robust internal controls in place can significantly reduce the risk of employee theft. Measures such as requiring countersignatures on large checks and segregating banking duties can make a big difference.

Example: A mid-sized retail business implemented a system where all checks over $5,000 required two signatures. This reduced their risk profile and lowered their fidelity bond premiums by 10%.

Compare Providers

Different bonding companies offer different rates and terms. By shopping around and comparing multiple providers, you can find the best deal that suits your needs.

Tip: Use online platforms to get quotes from several providers quickly. This can help you identify the most cost-effective option.

Implementing these strategies can help you manage and reduce your fidelity bond costs effectively. Next, we’ll address some frequently asked questions about fidelity bond costs.

Frequently Asked Questions about Fidelity Bond Costs

How much does a $50,000 fidelity bond cost?

The cost of a $50,000 fidelity bond can vary, but typically, it ranges from $257 to $320 per year. This variation depends on factors such as your industry risk and the number of employees with access to sensitive information.

For instance, a business in a high-risk industry like finance might pay closer to the higher end of this range. Conversely, a small business with fewer employees and less access to sensitive data might enjoy a lower premium.

Are fidelity bonds expensive?

Fidelity bonds are generally considered affordable, especially when compared to the financial protection they offer. Premiums can start as low as $100 per year for minimal coverage amounts like $5,000.

To give you a better idea:
– A $10,000 bond might cost around $126 per year.
– A $100,000 bond could be approximately $359 annually.

The cost is a small price to pay for safeguarding your business against potential losses from employee theft, fraud, or embezzlement.

Does fidelity charge fees on bonds?

Yes, fidelity bonds do come with fees, but these are usually straightforward. For example, if your bonding company charges 1% of the total bond amount, a $2,000 bond would cost you $20 annually.

Some providers might offer more transparent pricing. For instance, some charge a flat mark-up fee per bond, which can often be more economical. Always review the fee structure before committing to a bond to ensure you’re getting the best deal.

Next, we’ll conclude by summarizing the key points and how Surety Bonds Co can help you secure the right fidelity bond for your business.


At Surety Bonds Co, we understand that choosing the right fidelity bond is crucial for protecting your business and your clients. Whether you’re looking to safeguard against employee dishonesty or need coverage for specific industry risks, we offer solutions tailored to your needs.

Instant Online Quotes

Gone are the days of waiting for lengthy underwriting decisions. With our instant online quote system, you can receive a quote in real-time. This immediate feedback helps you make quick and informed decisions regarding your fidelity bond.

Immediate Approval

Once you receive your quote, our approval process is fast and hassle-free. We know that time is of the essence, so we offer immediate approval to get you covered as quickly as possible.

Download and Print Bonds Within Minutes

After approval, you can download and print your bond almost immediately. We provide a PDF version that you can print from the comfort of your home or office. This feature eliminates the need to wait for physical delivery, allowing you to fulfill your obligations swiftly.

Choosing Surety Bonds Co means choosing a partner dedicated to your success. Our commitment is to provide you with fast, reliable, and efficient surety bond services. Let us help you navigate the fidelity bond process with ease and confidence.

For more information on how we can assist you with your bonding needs, visit our Surety Bond Services page and get started today!


Fidelity Bonds: Pricing and Cost Considerations

Fidelity Bonds: Pricing and Cost Considerations

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