DEFINITION of 'Honesty Bond'

A bond posted by an organization or professional insuring the honesty and integrity of the bond issuer and/or its employees. An honesty bond insures the policy holder against theft, fraud and other dishonest acts by employees.

Also known as a "fidelity bond" or a "commercial blanket bond".

BREAKING DOWN 'Honesty Bond'

Most financial professionals are "bonded", which means there is protection against dishonest or illegal acts by employees. This bond, in turn, can be used to cover losses to the business or to consumers caused by dishonesty on the part of those employees. When used properly, honesty bonds can build trust with customers and invoke fiduciary responsibility among all employees.

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