A fidelity bond protects you against theft or dishonesty by people you hire to work in your home

A fidelity bond is insurance that reimburses you if a contractor, employee, or service provider steals from you or commits fraud while working on your property. It covers losses from theft of your belongings, money, or materials, as well as financial losses from deliberate dishonesty like billing fraud or embezzlement. The bond is held by the contractor or service provider, not by you — they purchase it to prove they are trustworthy, and you benefit if they are not.

Fidelity bonds are different from liability insurance. Liability covers injuries or property damage caused by negligence or accidents. A fidelity bond covers intentional wrongdoing or theft. Many contractors carry both, but they serve different purposes. When you hire someone to work in your home — whether a plumber, electrician, housekeeper, or handyman — a fidelity bond means you have a financial safety net if that person steals your jewelry, cash, tools, or materials, or if they overbill you deliberately.

Key Takeaways

  • Fidelity bonds reimburse you for theft or fraud by contractors and service providers, but only if the bond is actually in place before the loss occurs.
  • The contractor or service provider buys the bond and pays the premium, not you — it is a credential they carry to show they are trustworthy.
  • Fidelity bonds do not cover accidents, negligence, or damage; they cover only intentional dishonesty or theft.
  • You should ask contractors whether they carry a fidelity bond before hiring them, and request proof of the bond in writing.

Who buys a fidelity bond and why

The contractor or service provider buys the fidelity bond, not the homeowner. They purchase it from an insurance company and pay an annual or project-based premium. Contractors who work for larger companies — plumbing firms, electrical contractors, cleaning services — often carry fidelity bonds as a standard business practice. Solo operators and smaller businesses may or may not carry one.

Contractors buy fidelity bonds for two reasons: to reassure customers that they are trustworthy, and because some clients or jobs require it. If you are hiring someone to work unsupervised in your home, especially if they will have access to valuables or cash, asking whether they carry a fidelity bond is a reasonable question. It signals that you take security seriously and gives you recourse if something goes wrong.

What a fidelity bond actually covers

A fidelity bond covers direct financial losses from theft or dishonesty. This includes money or valuables stolen from your home, materials or tools the contractor was supposed to purchase but pocketed the money for, or overbilling where the contractor charges you for work they did not do or materials they did not buy. If a housekeeper steals jewelry, if a contractor bills you for supplies they never ordered, or if a service provider takes cash from your home, the fidelity bond reimburses you.

Fidelity bonds do not cover accidents, poor workmanship, property damage, or injuries. They do not cover disputes over whether work was done correctly or whether the price was fair. They cover only intentional wrongdoing — theft, embezzlement, or deliberate fraud. If a contractor damages your wall while installing a fixture, that is a liability claim, not a fidelity claim. If they overcharge you by mistake, that is a billing dispute, not fraud.

How to verify a contractor has a fidelity bond

Ask the contractor directly whether they carry a fidelity bond. If they say yes, ask for proof in writing — the name of the bonding company, the bond number, the coverage amount, and the dates the bond is active. Do not accept a verbal yes or a vague promise. A legitimate contractor will have this information readily available or will provide it within a day or two.

You can also contact the bonding company directly to confirm the bond is real and currently active. The contractor should give you the bonding company's name and phone number. A quick call to verify takes five minutes and gives you certainty. If a contractor refuses to provide proof or becomes defensive when asked, that is a red flag — it usually means they do not carry a bond.

Keep the bond information in your records along with the contract and invoice. If a loss occurs, you will need the bond number and the bonding company's contact information to file a claim. Most bonding companies have a claims process similar to insurance — you report the loss, provide documentation, and they investigate before paying.

Coverage limits and what you should know about claims

Fidelity bonds have coverage limits — typically ranging from a few thousand dollars to $100,000 or more, depending on the contractor and the type of work. A contractor working on a small home repair might carry a $10,000 bond. A larger firm doing renovation work might carry $50,000 or more. Ask what the coverage limit is before you hire them, so you know the maximum you can recover if something goes wrong.

Filing a claim requires documentation. You will need to prove the loss — receipts, photos, police reports if theft occurred, or detailed records of what was stolen or overbilled. The bonding company will investigate, which can take weeks or months. If they confirm the loss, they pay you up to the coverage limit. If the loss exceeds the coverage limit, you recover only up to that amount.

One important detail: the bond must be in place before the loss occurs. If you discover theft after the contractor's bond has expired or been cancelled, you cannot file a claim. This is why verifying the bond is active before work begins matters.

Fidelity bonds versus other protections

A fidelity bond is one layer of protection, but not the only one. A written contract that spells out the scope of work, materials, and cost protects you against billing disputes. Liability insurance protects you if the contractor damages your property or someone is injured. A contractor's license and background check tell you whether they have a history of complaints or criminal activity. Together, these protections — bond, contract, insurance, and verification — give you reasonable confidence in hiring someone.

If a contractor does not carry a fidelity bond, that does not automatically mean they are untrustworthy. Many small, honest contractors do not carry one because the cost is not worth it for their business model. But if you are hiring someone to work unsupervised in your home, especially for a large or high-value project, asking about a fidelity bond is a smart question to ask.

When to ask about a fidelity bond

You should ask about a fidelity bond when hiring someone for work that involves access to valuables, cash, or materials. This includes housekeeping services, contractors working unsupervised, handymen who will be in your home while you are away, or anyone handling large sums of money on your behalf. For smaller jobs where you will be present and supervising, or where the risk of theft is low, a fidelity bond is less critical.

If a contractor cannot or will not provide proof of a fidelity bond, you have options. You can hire someone else, you can supervise the work closely to reduce risk, or you can accept the risk and move forward. The decision depends on how much you trust the contractor, how much access they will have to valuables, and how comfortable you are with the potential loss.

Frequently Asked Questions

Does a fidelity bond cost me anything?

No. The contractor pays the premium for their fidelity bond as a business expense. You do not pay for it directly. However, some contractors may factor the cost of carrying a bond into their overall pricing, so indirectly you may pay a small amount through higher labor costs.

What should I do if I think a contractor stole from me?

Document what is missing or what was overbilled, gather any evidence (photos, receipts, communications), and contact the contractor first to give them a chance to explain or make it right. If they do not respond or deny responsibility, contact the bonding company with the bond number and file a claim. You may also file a police report for theft.

Can I require a contractor to carry a fidelity bond?

You can ask, and you can make it a condition of hiring them. However, not all contractors carry a bond, and some may decline the job if you require one. It is reasonable to ask, but you may need to compromise or hire someone else if they refuse.

Is a fidelity bond the same as a performance bond?

No. A performance bond guarantees the contractor will complete the work as promised and on time. A fidelity bond covers theft and dishonesty. Some contractors carry both, but they protect you against different risks.

What if the contractor's bond expires during the job?

Make sure the bond is active for the entire duration of the work. If it expires before the job is finished, ask the contractor to renew it. If a loss occurs after the bond expires, you cannot file a claim. Always verify the bond end date before work begins.