Fidelity Guarantee insurance is an insurance policy designed to indemnify the Insured (the employer) for the loss of money or property sustained as a direct result of acts of fraud, theft or dishonesty by an employee in the course of employment. Companies are exposed to significant financial losses annually, due to crime committed by employees and it is reported that Fraud is on the increase. Combined with the growth in the use of electronic data and asset transfers, the fidelity losses faced by employers are increasing substantially.
Fidelity guarantee insurance is most often sought by companies where employees are more likely to cause financial loss because of their constant exposure to cash, stocks or other assets. The potential losses that could arise from fidelity, especially with the increase in computer crime, make it pertinent that those employers at risk use fidelity guarantee insurance as a risk management tool.

COVERAGE
The cover provided includes reimbursement for loss resulting from:
• dishonesty,
• fraud,
• loss of property,
• loss from loans or trading
committed by an employee for improper personal financial gain. Theft of property by computer fraud and the theft of funds from the insured’s transfer account at a financial institution are also indemnified. In addition, defence costs, judgments and settlements are accommodated by the terms of the contract.

PRINCIPAL TYPES

1. Individual Policy:

The policy covers one individual only for a stated amount.

2. Collective Policy:

A schedule is included in the policy. The Insured decides the amount of guarantee required for each individual according to his or her responsibilities and position.

3. Floater Policy:

A single amount is shown in the policy which represent the Company’s liability in respect of any one individual and its total liability in respect of all the employees guaranteed who are individually named in the schedule. Such policies can be granted where the number of persons to be guaranteed is not less than five.

4.Blanket Policy:

It is possible to issue in certain selected cases, blanket policies without the names of the guaranteed persons being shown, in respect of all employees who are grouped according to categories, e.g. employees handling cash, other clerical staff, etc. They are issued only to large well-established business houses conducted on sound lines.

CONDITIONS The Policy and the Schedule shall be read together and any word or expression to which a specific
meaning has been attached in any part of this policy or of the schedule shall bear such meaning
wherever it may appear.

1) The Insured shall if and when required by the Company but at the expense of the Company if a
conviction be obtained, use all diligence in prosecuting any of the employee to conviction for any act Registered Office-State Bank Bhavan, Central Office, 8th Floor, Madame Cama Marg, Nariman Point,
which such employee shall have committed and in consequence of which a claim will have to be made
under such policy and shall at the Company’s expense give all information and assistance to enable the
Company to sue for and obtain reimbursement by any such employee by reason of whose acts or
defaults a claim has been made or by the estate of such employee or money which the Company shall
have become liable to pay in respect thereof.

2) The Policy shall be null and void in the event of misrepresentation, misdescription or
nondisclosure in any material particular or if a claim be fraudulent or any fraudulent means or devices
be used by the Insured or any one acting on his behalf to obtain any benefit under this Policy.

3) The Company shall be entitled at its own expenses and for its own benefit, in the name of the
Insured to prosecute all claims and exercise all rights of action competent to the Insured against the
employee in respect of any act insured against in connection with which it may have made payment
under this Policy and the Insured shall give to the Company all such information and assistance as may
be reasonably required for maintaining such claims or rights.
4) The Company may but without prejudice to the rights of the Insured in respect of claims of
which notice shall have to be given to the Company cancel this policy by sending Fifteen days notice by
Registered Letter to the Insured at his last known address and in such event, will return to the Insured
the premium less the pro-rata portion thereof for the period the Policy has been in force or the Policy
may be cancelled at any time by the Insured on Fifteen days notice (provided no claim has arisen during
the then current period of insurance) and the Insured shall be entitled to returning of the premium less
premium at the Company’s short period rates for the time the Policy has been in force. However, if a
claim is made under the policy, the Company will retain the entire premium.

5) If the Insured is or shall hereafter be guaranteed by any other person, society or company or hold other security or
insurance against such loss as is hereby guaranteed, the Company shall only be liable to bear the loss rateable with such
person, society or company or securities or insurance.
6) Any money of the Employee in the hands of Insured and any money which but for the Employee’s dishonesty would have
been due to the Employee from the Insured shall be deducted from the amount otherwise payable under this Policy. Any money recovered after the settlement of any claim shall be the property of the Company not exceeding, however, the amount paid by the Company.

SALIENT FEATURE
he term “Fidelity Guarantee Insurance” embraces policies indemnifying employers against financial loss on account of forgery, defalcation, embezzlement and fraudulent conversion by employees. The object is to provide protection in respect of the default of an individual acting in capacity such as Cashier, Accountant, Store-keeper etc.

EXCLUSONS
The policy does not cover any loss:
I. Discovered more than 12 months after the termination either of the guarantee
or the service of employee concerned.
II. When there has been any change in the agreed system of check of accounting
precautions without the Insurer’s prior consent.
III. Caused by an employee after discovery of his previous fraud or dishonesty.
IV. Losses such as stock taking shortages, trading losses, not caused by fraud or
dishonesty.
V. Liability arising out of violation of any Rules and Regulation of the Govt. or
Statutory authorities.
VI. Loss arising outside India

CLAIMS
A fidelity gurantee claim form usually contains questions relating to,Amount of the salary commission or other remuneration or allowance that may be due from the insured to the defaulting employee. whether the matter is reported to the police and if so, the date , time and place of reporting. period for and the manner in which the embezzlement has been carried on and concealed. security held by the insured in respect of the defaulting employee.

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