Fidelity bonds for technology businesses and IT professionals

If an employee engages in unlawful activity, your cybersecurity, data center, or technology business could be held liable for damages. Fidelity bonds protect technology businesses from employees who illegally access sensitive information or steal from you or a client.

This policy provides liability coverage related to:

• Theft or fraud
• Electronic funds transfer
• Unlawful data access

This coverage is also called commercial crime insurance or employee dishonesty coverage. It’s important to note that the bond amount must be paid back in full to the bond issuer. Think of a bond as more of a line of credit, rather than insurance coverage.

There are two kinds of fidelity bond coverage: first-party and third-party.

First-party fidelity bonds protect your business property and assets from dishonest employees. They can cover financial loss related to:

• An employee who commits embezzlement from your company
• An employee who commits fraud against your company
• Employee forgery that affects your company

If your company has employee benefit plans, you must comply with the Employee Retirement Income Security Act (ERISA). You're required to purchase an ERISA fidelity bond, also called a fiduciary bond, which protects the beneficiaries of your retirement plan from employee theft.

Third-party fidelity bonds, sometimes called business service bonds, protect your clients’ property from dishonest employees. They can cover expenses related to:

• An employee who steals from a client
• An employee who commits fraud against a client
• Employee forgery that affects a client

IT professionals, especially IT consultants, managed service providers (MSPs), or IT trainers who work with clients in the financial services industry are often at more risk for employee fraud. They may have a greater need for a bonding program to protect their company and satisfy client contract requirements

Fidelity bonds protect against employee theft and fraud, but your tech company faces many other risks. IT professionals should also consider the following insurance policies as part of their risk management plan:

General liability insurance: This policy covers expenses related to client injuries and property damage, such as a slip-and-fall injury in a data analyst's or PC builder's office. Technology businesses can often bundle it with commercial property insurance for savings in a business owner’s policy (BOP).

Errors and omissions insurance (E&O): This policy is critical for IT consultants, EdTech companies, cloud computing businesses, and many other tech professionals. Also called professional liability insurance, it covers lawsuits related to work mistakes, such as an error that causes a client’s server to crash.

Cyber insurance: You may want to invest in cyber liability insurance to protect your own company’s stored data, such as clients’ credit card numbers, or to protect against lawsuits related to a data breach at a client's business.

Workers’ compensation insurance: This policy covers medical bills and disability benefits from work-related injuries and illnesses. Most states require technology businesses with employees to purchase workers’ compensation.

Commercial auto insurance: This policy is required in most states for business-owned vehicles. It can cover property damage and medical bills in an accident involving your IT company's vehicle, along with theft, vandalism, and weather damage.

Are you ready to protect your IT enterprise with essential insurance coverage or a fidelity bond? Complete our easy online application today to get free quotes for business insurance. Insureon's licensed insurance agents work with top-rated U.S. insurance companies to find the right insurance plan for your technology business.

Once you find a policy that fits your needs, you can consult a licensed insurance agent to add options such as bonds and endorsements. For most small business owners, coverage can begin in less than 24 hours.