(a) Explain a fidelity guarantee insurance policy. (b) List and explain the four types of policies in fidelity guarantee insurance.

(a) Fidelity guarantee insurance policy

A fidelity guarantee insurance policy is a form of insurance that protects an employer against financial loss caused by the dishonesty, fraud, embezzlement or defalcation of his employees in the course of their employment. It indemnifies the employer for money or property lost through the infidelity of persons placed in a position of trust.

(b) Four types of policies in fidelity guarantee insurance

1. Individual (named) policy: This covers one named employee against whose dishonesty the employer wants protection. It is used where only a particular person, such as a cashier, handles money.
2. Collective (schedule) policy: This covers a group of named employees under one policy, each with a stated amount of guarantee shown against his name in a schedule.
3. Floating (floater) policy: This covers a group of employees for one overall (floating) sum that can apply to any member of the group, without allocating a fixed amount to each person.
4. Positions (blanket) policy: This covers the holders of stated positions or offices rather than named individuals, so that whoever occupies the post at the time of loss is automatically covered.