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Fidelity bonds cover loss caused by the dishonest or fraudulent acts of employees such as embezzlement and theft of money. Many insurance companies carry fidelity insurance to protect against net capital losses due to theft and fraud. Forgery is also a protected matter of a fidelity bond.

Surety bonds, also known as performance bonds, provide for monetary compensation in the case of failure by bonded persons to perform certain acts or duties (ex. failure of a contractor to construct a building in a timely matter). The insurance company pays off a set maximum amount for the default or failure of a party to fulfill its obligations due to whatever reason.

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