INSURANCE INSIGHTS
There are reasons to consider adding an optional dishonesty bond to liability insurance policy
By David Pearsall
What is a Dishonesty Bond ? Do I need this for my business ? These are frequently asked questions we hear when Association of Professional Dog Trainers ( APDT ) members are applying for liability coverage or renewing their liability policy via the APDT Liability plan . This optional coverage endorsement was added to the APDT Liability Insurance plan application in late 2019 but had previously been available under a separate policy . So , for this briefing , let ’ s look at what the APDT Dishonesty Bond is , and who it covers , to determine if this optional coverage endorsement is needed for your individual business .
A typical employee dishonesty bond ( sometimes referred to as a fidelity bond ) protects a business from a loss because of a theft committed by their employees ; for example , if you were a distributor of pet products and discovered your employee had been stealing products from your company . Another similar type of dishonesty bond , often referred to as a business services bond , protects the clientele of the business against a theft by one of their employees ; such as if you were a contactor and a member of your team were to steal personal property such as jewelry , electronics , or money from your clients while in their homes doing repair work . For a dog trainer , pet sitter , or dog walker , the exposure is very much the same .
Most trainers / APDT members understand the need for general liability insurance but may or may not understand the differences between general liability insurance and a business service dishonesty bond . First , general liability insurance protects your business against bodily injury or property damage to a third party due to your negligence , whereas a dishonesty bond protects your business or your clientele or prospective clientele against theft or dishonest acts by you ( depending on policy coverage form ) and your
employees or independent contractors ( again depending on policy coverage form ). Second , with an insurance contract , there are only two parties involved , the insurance company , and the business purchasing the coverage ( you , the insured ). With a bond contract , there are three parties involved , first party being your business , the second party being your customer , and the third being the bonding company . And last , what occurs when a claim is made / paid . With liability insurance , the insurance company defends and pays the loss if proven , and insurance company takes the loss . With a business service bond , the bonding company validates proof of loss , and pays / reimburses your clients for the loss , then looks to the guilty party to recoup the payment .
Many of you have likely seen the plumbing contractor or electrician with the words insured and bonded on the side of their work van . The same would apply to your business if you are entering into client ’ s personal residences . The public wants to know that they are protected against all potential losses if you are coming into their homes and will be performing work there . By having a bond in place , you are advertising that your business is honest and reputable , and one that can be trusted .
It is important to note that all employee dishonesty bonds are not created equal . Be sure to review the definition of employee and what is required for the bond company to pay out . Under the APDT Dog Trainer Dishonesty Bond , the definition of employee includes all owners and officers , full and part time employees , independent contractors , and volunteers . And in lieu of a conviction clause that most bonds require for the insurer to pay a claim , the APDT Policy simply requires a burden of proof that could be an admission of guilt by your employee or independent contractor , or an eyewitness or video recording .
Many of you have likely seen the plumbing contractor or electrician with the words insured and bonded on the side of their work van . The same would apply to your business if you are entering into client ’ s personal residences . The public wants to know that they are protected against all potential losses if you are coming into their homes and will be performing work there . By having a bond in place , you are advertising that your business is honest and reputable , and one that can be trusted .
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