Fidelity Bond: insurance against losses due to the dishonesty of an employee.

• A. Fidelity Bond
• B. Payment bond
• C. Performance or completion bond
• D. Surety bond

Answer: (A)

When a business wants protection against losses caused by an employee’s dishonest actions, a fidelity bond is used. It specifically covers theft, embezzlement, and other dishonest acts by employees, reimbursing the employer up to the policy limit. This is different from a payment bond, which guarantees payment to subcontractors and suppliers if the contractor defaults; a performance or completion bond, which ensures the project is finished as agreed; and a broader surety bond, which covers various other guarantees. So the fidelity bond is the one that directly addresses losses from employee dishonesty.