Fidelity bond: employee theft coverage, riders' property, and the bond a 401(k) plan needs

What a fidelity bond covers

A fidelity bond covers your company’s loss when one of your employees steals, and it is bought with the rest of your NEMT insurance. The Surety and Fidelity Association of America (SFAA) explains that fidelity bonds began as three-party surety bonds that guaranteed an employee’s honesty, and that today’s are two-party insurance policies. They are also sold as employee dishonesty insurance, a commercial crime policy, or crime insurance. The risk management publisher IRMI describes the coverage as insurance for employee theft of money, securities, or property, written with a limit per loss, per employee, or per position. A commercial crime policy typically bundles it with forgery or alteration, computer fraud, and funds transfer fraud coverage.

Virginia’s State Corporation Commission notes the two ways a policy can name people: a bond may list particular people or positions, or a blanket form can apply to all employees.

A dispatcher who diverts fuel card charges and a driver who keeps cash fares are examples of the loss this coverage exists for. Whether a specific loss qualifies depends on how the policy defines employee and theft, so read the wording before you rely on it.

How a fidelity bond differs from a surety bond

A fidelity bond protects you from your own staff. A surety bond promises someone else that you will finish a job or follow a rule. SFAA calls it a three-party agreement that protects the party the bond is written for, and sorts surety bonds into contract bonds (bid, performance, and payment) and commercial bonds such as license and permit bonds. The contract kind is covered in surety bonds for transportation contracts. Neither contract bonds nor commercial surety bonds pay you back when a driver steals.

Who asks a ride company for a fidelity bond

Area agencies on aging, Ohio’s aging department and one large health system ask for it, usually as a line in their insurance requirements. Four public examples:

• Southern Mississippi Planning and Development District. Its Area Agency on Aging transportation request for proposals for October 1, 2026 to September 30, 2027 requires a fidelity bond of at least 25 percent of the contract amount before work starts. The bond must cover the faithful performance of all staff who receive or disburse contract funds, and it may not cut off the period for discovering or recovering a loss earlier than three years after the contract expires. On a $60,000 contract, which is an example, 25 percent is $15,000.
• home52 and the Council on Aging of Southwestern Ohio. Their insurance list for transportation providers asks for third-party fidelity or similar insurance covering a client’s loss from theft or damage of the client’s property or money by any employee or volunteer. The provider must also require the same amount of insurance from every subcontractor.
• Ohio Department of Aging. Its rule for certified providers, 173-39-02, requires $1,000,000 in commercial liability insurance that includes coverage for individuals’ losses from theft or property damage. The non-agency application checklist asks for a current policy covering employee dishonesty or property damage to others, which can be a warranty, surety, or business services bond. Its non-medical transportation rule, 173-39-02.18, makes those providers subject to the same general requirements.
• Mass General Brigham. Its 2026 supplier insurance obligations ask for commercial crime insurance, including coverage for the health system’s property, with a per loss limit of at least $5,000,000. The trigger is a supplier having care, custody, or control of the system’s money or providing other services tied to its finances, so it applies to a ride company only if it collects or holds funds for the system.

The MTM agreement for Pennsylvania and the WellTrans agreement for Indiana set insurance minimums for auto and liability coverage and do not ask for crime coverage. A rider’s wheelchair or belongings are a different gap, covered in wheelchair damaged during transport.

The bond a 401(k) plan needs

An ERISA plan that holds assets, such as a 401(k), must have its fiduciaries, and everyone who handles its money, bonded. Under 29 U.S.C. 1112, the bond is at least 10 percent of the funds handled. It is never less than $1,000 and not more than $500,000, or $1,000,000 for a plan that holds employer securities. The amount is fixed at the start of each plan year, and the Labor Department measures it on the funds handled in the preceding year.

The Labor Department’s Field Assistance Bulletin 2008-04 adds the terms that trip people up:

• The surety. It must be on the Treasury Department’s Circular 570 list, or in some cases be Lloyd’s of London underwriters, and neither the plan nor a party in interest may control the surety or the broker, or hold a significant financial interest in either.
• The insured. The plan must be named on the bond so its representatives can make a claim.
• The deductible. None is allowed up to the required amount, because the bond pays from the first dollar of loss.
• The discovery period. The plan gets one year after the bond ends to find a loss from the bond’s term.

The guide to using a 401(k) to start a NEMT business covers when drivers joining the plan trigger the rule.

A free bond for a hard-to-place hire

The Department of Labor’s Federal Bonding Program gives an employer a free fidelity bond for a hire whose background is a barrier to employment, such as a criminal record or poor credit. Each bond has a $5,000 limit, no deductible, and lasts the first six months of employment. It covers employees paid wages with federal taxes withheld and cannot cover self-employed people, so a 1099 driver is out. The felon driver guide covers the hiring rules, and employee or contractor explains the classification line.

Questions to ask your agent

Contracts usually ask for proof of coverage, often a certificate of insurance. Get these answers in writing before you buy or renew:

• Whose loss is covered. Your company’s only, or a client’s property and money as well.
• Who counts as an employee. Ask about volunteers, temporary staff, and 1099 drivers. home52 names volunteers, and the Federal Bonding Program excludes self-employed people.
• How the limit works. Per loss, per employee, or per position.
• How long after the policy ends you can still report a loss. Mississippi’s contract asks for three years past the contract’s end.
• What the deductible is.

Keeping cash and fare records straight

HealthRide lets you record cash and check payments next to card payments on one ledger, and every change is recorded, so a number that looks wrong has a history. See payments.