What type of bond protects an employer from losses caused by employee actions?

A fidelity bond is specifically designed to protect an employer from losses that occur due to dishonest or fraudulent actions of their employees. This type of bond provides coverage for various forms of employee misconduct, such as theft, embezzlement, or fraud. In many cases, companies might require employees in positions that manage money or have access to sensitive information to be bonded, ensuring that if any financial misconduct happens, the employer can recover their losses through the bond.

The other options, while they serve important roles in risk management and protection, do not focus specifically on employee actions. For example, a performance bond guarantees the completion of a project to the specifications set in a contract; a surety bond provides a guarantee that the principal will fulfill their obligations, with a focus on third-party obligations, while a liability bond typically covers bodily injury and property damage claims against a business, not employee dishonesty. Therefore, the fidelity bond is the correct choice for protecting employers against losses caused by employee actions.