First of all; there are two types of fidelity bond; there is the first-party bond and a third-party bond. In this sense; a bond is a type of insurance taken out by someone (usually some sort of corporate enterprise) to protect themselves financially in the event of something specific happening. Often; but not always, the decision on taking out a bond is not actually made by the corporation; rather, they are obligated to take them out under terms of contract with their customers or clients; also, in some cases, State legislation may demand bonding for certain activities.
A first-party Fidelity Bond For California will be taken out by a corporation to protect itself against dishonesty from its employees in California. A third-party Fidelity Bond In California is to protect the corporation from the consequences of any dishonest act carried out by people working for them in California on a contract basis (i.e. not direct employees but the likes of consultants or independent contractors).
It’s More Than Just A Standard Insurance Against Theft
Apparently, on average, employees in the US steal some $100 billion each year from their employers. However, the purpose of taking out a Fidelity Bond For California is not to gain compensation when you discover a clerk has been stealing paper clips from you. Your Fidelity Bond For California is to protect you from more serious incidents; basically involving fraud; removal; or, unauthorized modification of computer documents or records; etc.
For example, if you were the main contractor on a major project and it was discovered that a quantity surveyor working for you had been taking backhanders for allowing sub-standard materials to be used on the project; your organization (as the signatory to the contract); could be facing big penalties from your client; likewise, a bank that discovers someone working for them has been diverting funds out of customers’ accounts into their own secret account will be facing all sorts of liabilities when the fraud is uncovered. Assuming that these examples happened in California; the victim organizations will be very glad to have had the foresight to arrange a Fidelity Bond For California. It should also be noted that organizations, not based in California; but having contracts there; or, Branch Offices located in California; should take care to ensure that any bonds they take out; cover their Californian activities.
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