Fidelity coverage definition: Fidelity coverage covers the policyholder for a loss incurred due to the fraudulent act of specified individuals.

• A. True
• B. False
• C. Covers only the policyholder for losses due to fraudulent acts of unspecified individuals
• D. Covers losses due to non-fraudulent acts

Answer: (A)

Fidelity coverage, often called a fidelity bond, protects the policyholder against losses that arise from the dishonest or fraudulent acts of employees who are named or covered in the policy. The key is that the loss must result from fraudulent acts by those specified individuals; it does not cover non-fraudulent acts, and it generally does not extend to acts by people who aren’t named or covered. So the statement is true: fidelity coverage covers the policyholder for losses incurred due to the fraudulent acts of specified individuals.