The word Fidelity means “faithfulness; adherence to right; careful and exact observance of duty, or discharge of obligations”

In simple terms, Fidelity Insurance is based on the meaning of the word “fidelity” - therefore, Fidelity Insurance is an insurance policy that protects a Business or Organisation against financial loss as a result of an employee’s and/or officeholder’s dishonesty [breach of fidelity].

According to relevant statistics, the cost of employee theft for retail businesses alone is almost NZD$1bn annually.

Statistics in relation to embezzlement and/or theft of funds from non business organisations such as; community associations, non-profit organisations and clubs is believed to reflect similar figures however, the sad fact is many of these types of organisations don’t report their losses.

Employee dishonesty is a crime; it can take many forms such as embezzlement of funds, false invoicing, theft of cash false inventory, payroll fraud and computer fraud to name a few however, such crime-related losses are not typically covered by property or liability insurance policies.

Similarly, dishonest acts of an organisation’s official, committee member &/or secretary which result in a financial loss to the organisation is also a crime; but once again not typically covered by property or liability insurance policies.

Fraud and embezzlement is on the rise, occurring in even the best work environments by those very people most trusted by their victim; for instance did you know,

• approximately 80% of workplace crime is carried out by employees; and

• in almost all cases, theft of funds &/or property from non-profit organisations, associations & clubs is carried out by their very own officials?

• one in four employees has either committed or witnessed workplace fraud;

• one in four employees committing fraud against their employer has been with the company for more than 10 years;

• only one in three of those who have witnessed a workplace crime bother to report it.

Without Fidelity Insurance it’s unlikely you will be able retrieve all the money lost, especially if it was spent.

Fidelity insurance is a means for a Business or Organisation to insure their assets from the dishonest acts of others.

Most Fidelity insurance policies cover:-

• loss of money &/or property due to an employee's, &/or an official’s dishonesty; including for,



• theft,
• embezzlement,
• forgery
• computer crime
• false invoicing;
• false inventory,
• payroll fraud; and



• suspicious loss of money &/or property that cannot be directly attributed to a particular employee.

Generally, a Fidelity insurance policy will cover the loss of cash and property while it's on the business'/organisation’s premises, in transit, or otherwise temporarily in another location.

However, not all losses caused by employees or officials are covered; for instance,

• losses caused by carelessness or by deliberate acts that were not intended to provide any gain for the employee or official would not be covered;



• coverage does not extend to accounting errors.



• write-downs of inventory at year-end due to shrinkage is not a claim, unless it can be tied to specific acts of an employee or acting with manifest intent.

Fidelity insurance policies tend to differ in the cover provided because employee dishonesty can take many forms thus, a policy’s wording sometimes has to be tailored to reflect a particular industry’s requirements; for instance,

• a building society’s fidelity risk would likely be greater than a solicitor’s practice;



• similarly, a local football club’s coffers would likely be at less risk of a serious breach of fidelity than a charity collecting donations from the public at large;

but, the risk is there for any business or organisation, no matter the size or complexity.

Warning:- Relying on the inclusion of Fidelity insurance as an ‘extra’ to a standard property or liability insurance policy might give a false impression that you’re adequately covered however, the terms, conditions, limitations and exclusions affecting the fidelity cover generally link back to non-fidelity specific clauses in the policy which could render the cover worthless.  

Yes, it’s ideal because independent contractors or consultants are not employees, nor are they necessarily officers of an organisation thus, any business or organisation using independent contractors or consultants in a capacity that touches upon their finances &/or property would be wise to insist on such contractors or consultants having their own Fidelity insurance as a mandatory requirement before providing services.  

If you only want to cover ‘money’ and the people who have access to it, you may want to consider a Fidelity Bond.

Fidelity Bonds are generally used in situations involving risk that an employee could steal from a third party. For example, a stock brokerage would bond employees to cover potential thefts from customers [third parties].

Unlike Fidelity Insurance, which involves two parties, the ‘insured’ and the ‘insurer’; Fidelity Bonds involve three parties.

• the ‘Principal’ is the person who might cause the loss;
• the ‘Obligee’ is the person who would collect if the Principal caused a loss; and
• the ‘Surety is the entity that pays the loss. (The Insurer &/or the Surety Bond Issuer)

This is a less expensive form of Fidelity insurance because it provides more specific and narrower cover limited to the individual parties named in the ‘Bond’. Find out more about Fidelity Bonds click here

It will depend on the size, scope and complexity of your business or organisation.

Determining the right level of fidelity protection for your business or organisation is best left to the experts such as RGIB; because as you can see, it can be tricky.

Because we’re specialists in Fidelity Insurance the first thing we’ll do is analyse the ‘fidelity risk’ facing your business or organisation and then advise on the best solution to guard against these types of risks.

Some of the types of things we’ll take into consideration will be the:-

• type of business or organisation;
• quality of risk management practices;
• integrity of key people and management;
• physical value to the business of stock, materials or money at risk;
• number of employees or officials with access to the above;
• likelihood of employees or officials engaging in dishonest acts;
• measures your business has in place to prevent employee theft and dishonesty; and,
• in respect of an organisation, the integrity of the officials, particularly the Treasurer & Secretary.

RGIB is a commercial insurance specialist; we’re one of the industry’s leaders in arranging Fidelity insurance for all types of businesses and organisations, no matter how big or small the client is..

We know what Fidelity insurance products are on offer; we know which underwriters are the best at it; who pays claims without complication; and who offers the widest range of protection for our clients at the most affordable price.

It’s our job to get the right fidelity product for you; either as a stand alone policy or in combination with Management Liability Insurance and/or a Broad-Cover Property Insurance package designed to incorporate the specific requirements of fidelity.