Fidelity Insurance Law and Legal Definition

Fidelity insurance is a form of insurance in which the insurer undertakes to guaranty the fidelity of an officer, agent or employee of the insured. The insurer indemnifies the insured for losses caused by dishonesty or want of fidelity on the part of an employee. It is a contract which partakes of the nature both of insurance and of surety ship. A contract may be avoided by the failure of the insured to disclose to the insurer, any known previous acts of dishonesty on the part of the employee, or any dishonest practices that may occur during the currency of the policy. The insured is not required to give notice of mere irregularities not involving moral turpitude. Contract of fidelity insurance is called Fidelity bond.