Explain "fidelity bonds."

Fidelity bonds are designed specifically to protect businesses from losses caused by dishonest acts of their employees. This type of insurance addresses risks associated with employee theft, fraud, or embezzlement, which can have devastating financial repercussions for an organization. When a fidelity bond is in place, if an employee commits an act of dishonesty that results in a financial loss to the company, the business can file a claim against the bond to recover some or all of the lost funds. This is crucial for organizations that handle significant amounts of money or sensitive information, as it provides an additional layer of security and peace of mind.

Other types of insurance, while important in their own right, serve different purposes. Insurance for natural disasters focuses on physical damage caused by events such as floods or earthquakes, liability coverage is concerned with injuries or damages resulting from workplace accidents, and operational error insurance protects against mistakes made in the course of business operations. Each of these types of insurance addresses specific risks, whereas fidelity bonds uniquely safeguard against employee dishonesty.