Fidelity Guarantee Insurance
Cover The Losses Caused By Trusted Staff
Most businesses guard carefully against outsiders, yet some of the costliest losses come from inside: a cashier skimming receipts, an accountant diverting payments or a storekeeper selling stock on the side. Fidelity guarantee insurance reimburses you for direct financial loss caused by fraud, dishonesty or embezzlement by your employees. MILES helps you choose between named, position and blanket forms, set sensible limits for each role and put the internal checks in place that insurers expect before they pay.
What Fidelity Guarantee Insurance Covers
Embezzlement Of Money
Direct loss of cash or funds misappropriated by an employee in the course of their duties.
Theft Of Goods
Stock, materials or property stolen by an insured employee, valued at cost as proven in your records.
Forgery And Fraud
Loss from forged cheques, false invoices or fraudulent entries made by covered staff, subject to wording.
Named Or Blanket
Cover selected individuals, specific positions, or every employee on the payroll under one blanket limit.
Discovery Period
Losses discovered within the agreed period after the act or after the employee leaves remain claimable.
Cash Handler Focus
Particularly useful for cashiers, collection staff, accountants, storekeepers and society office bearers handling funds.
What is fidelity guarantee insurance?
Fidelity guarantee insurance is a policy that reimburses an employer for direct financial loss caused by the fraud, dishonesty, theft or embezzlement of its own employees. It protects the business against the people it trusts with money, stock and records, which ordinary property and burglary policies specifically exclude.
It is part of our specialty and other insurance range and often sits alongside money insurance, which covers robbery by outsiders but not dishonesty by staff.
Types of fidelity guarantee cover
Indian insurers offer the cover in a few standard forms. The right one depends on your size and how many people handle funds.
| Form | How it works | Best for |
|---|---|---|
| Individual policy | Covers one named employee for a fixed amount | A single cashier or accountant |
| Collective (named) policy | Lists several named employees, each with their own limit | Small offices with a handful of cash handlers |
| Floater policy | One shared limit across a named group of employees | Teams where exposure moves between people |
| Position policy | Covers designations rather than names, so replacements are automatically included | Branches with staff turnover |
| Blanket policy | Covers all employees without naming them | Larger organisations with sound internal controls |
What is covered
- Direct loss of money, securities or goods caused by an act of fraud or dishonesty by a covered employee.
- Acts committed in the course of the employee’s duties and during the policy period.
- Losses discovered within the discovery period stated in the policy, often a set period after the act or after the employee leaves.
- For housing societies, dishonesty by paid staff and, where insurers agree, honorary office bearers who handle society funds.
What is not covered
- Losses caused by the business owner, partners or directors themselves, unless specifically agreed.
- Losses from an employee after you learnt of an earlier dishonest act by them and kept them in the same role.
- Shortages from errors, negligence or poor bookkeeping without dishonest intent.
- Indirect or consequential losses, such as lost profit, reputation damage or investigation costs, unless extended.
- Losses discovered outside the discovery period.
Who needs it
Any employer whose staff handle cash, bank payments, inventory or confidential pricing. Typical buyers include retailers and distributors, jewellers, NBFCs and microfinance lenders, hospitals and pharmacies, logistics companies, cooperative banks and credit societies, and residential societies that collect maintenance. Businesses where one person both records and handles money are especially exposed.
How the premium is decided
Insurers price each role by the amount of money or goods it can realistically access. They also ask about your internal controls, and these carry real weight:
- Frequency and scope of internal and statutory audits.
- Separation of duties between authorising, recording and paying.
- Bank reconciliations and who performs them.
- Background checks at hiring and rotation of sensitive roles.
- Cheque-signing limits and dual authorisation for payments.
Most policies make your answers in the proposal form a condition of cover. If you promise monthly audits and then skip them, a claim can be declined. Premium rates vary by insurer and occupation, so we compare several.
How MILES helps
- Map the exposure. We list every role that touches money or stock and estimate the maximum realistic loss for each.
- Choose the right form. We explain whether individual, position, floater or blanket cover gives better value for your structure.
- Compare wordings. We check discovery periods, definitions of employee and exclusions across insurers, not just price.
- Align the proposal with reality. We make sure the controls you declare are ones you actually follow.
- Guide the claim. Our claims team helps you assemble audit findings and evidence for the surveyor.
How a claim works
- On discovering the fraud, suspend the employee from handling funds and preserve all records.
- Inform the insurer or MILES promptly in writing, within the period stated in the policy.
- Lodge a police complaint where required by the insurer.
- Commission or share an audit report quantifying the loss.
- Recover whatever you can from the employee’s dues; the insurer deducts this from the claim.
- The insurer settles the proven loss, less any deductible, up to the employee’s or policy limit.
Cover, exclusions and premiums depend on the insurer’s policy wording and underwriting. MILES Insurance Brokers Pvt. Ltd. is an IRDAI-licensed direct broker (Life & General, Reg. No. 954); the insurance is issued by the insurer. Insurance is the subject matter of solicitation.