June 7, 2022

Fidelity Guarantee Insurance

Fidelity Guarantee Insurance


Fidelity Guarantee Insurance is a Business Insurance policy that covers a company's financial losses arising out of acts of fraud or dishonesty committed by one or more of its employees.

A business’s most important resource is its workforce. Employees, managers, and executives are responsible for all kinds of important assets including the company’s finances, inventory, and trade secrets. It goes without saying that the functioning of any organisation requires a degree of trust between the owners and the employees.

However, it is not uncommon for this trust to be breached by an employee looking to skim the business out of money, customers or intellectual property. It is often the trusted and senior staff members who are able to evade security measures and commit artful frauds.

In order to safeguard the business’s interest from such unscrupulous staff members, insurance companies offer what is known as Fidelity and Guarantee Insurance. This kind of Insurance is designed to cover the business’s monetary losses in the event of any criminal or fraudulent act committed by one of its employees.

Let’s look at the inclusions and exclusions under this policy in detail below :


Fidelity and Guarantee Insurance indemnifies the insured business against direct pecuniary loss resulting from any act of fraud or dishonesty committed by an employee during the policy period. It provides coverage for :

  • Loss of money, securities or other assets resulting from employee theft
  • Computer fraud
  • Forgery
  • Embezzlement
  • Misappropriation
  • Fraudulent conversion (unauthorised possession of money or property) by an employee
  • Loss of employee benefit plan assets
  • Burglary or robbery committed by an employee

This insurance also covers frauds that are discovered up to 12 calendar months from retirement, dismissal, or death of the fraudulent employee, or from the expiry of the policy. However, in such cases the fraudulent actions of only one employee can be covered by the insurer.

The liability of the insured business under this policy can be covered in two ways :

  • On a named person basis - fraudulent acts committed by the employee whose name is specifically declared in the policy will be covered up to the Sum Insured stated against their name
  • On an all claims basis - fraudulent acts committed by any of the company’s employees will be covered up to the total Sum Insured


This policy comes with some exclusions. The following events are not covered unless specifically mentioned in the policy schedule :

  • Losses occurring outside of India
  • Consequential loss of any kind, loss not reflected in the insured’s books of account, business interruption, loss of market, etc.
  • Any legal liability of any kind
  • Expenses incurred by the insured in establishing the existence of or quantification of any fact that gives rise to a claim under the policy
  • Unexplained losses or shortages discovered at stock taking
  • Any fact, or matter of circumstance which the insured was aware of or ought to have been aware of at the commencement of the policy
  • Willful acts or gross negligence on the part of the insured business

Fidelity Guarantee Insurance is an ideal policy for financial institutions, manufacturing concerns, tech companies, or any other business that intends to protect its sensitive data from the hands of corrupt and unethical employees. This kind of insurance is relatively affordable in nature and is often purchased in conjunction with a Fire and Allied Perils Insurance Policy.

Know more about which kind of insurance policies can be clubbed together with Fire Insurance here

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.