This clause requires insurance against theft, fraud, or dishonesty by employees. For example, if an accountant steals £50,000 from the till or a manager embezzles company funds, fidelity insurance reimburses the company for the loss. This matters legally because employees have access to cash, data, and assets, and the company is responsible for protecting its own money—courts won't excuse negligence just because an employee was dishonest. The insurance acts as a safety net and also encourages the company to have proper financial controls (like requiring two signatures on checks). This is standard practice for any business handling cash or valuable inventory.
This is a low-risk clause to accept—it protects *you* as much as the other party, so don't resist it. However, check that the coverage limit matches your actual cash handling (if you hold £200,000 in petty cash, insure for at least that amount). Ensure the policy covers all employees, not just senior staff, since fraud often comes from unexpected places. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires insurance against theft, fraud, or dishonesty by employees.
Why should I care about this clause?
For example, if an accountant steals £50,000 from the till or a manager embezzles company funds, fidelity insurance reimburses the company for the loss.
What are my options?
This matters legally because employees have access to cash, data, and assets, and the company is responsible for protecting its own money—courts won't excuse negligence just because an employee was dishonest.
How does this affect small businesses?
The insurance acts as a safety net and also encourages the company to have proper financial controls (like requiring two signatures on checks).