What is a key function of fidelity guarantee insurance?

Fidelity guarantee insurance primarily serves to protect businesses against losses incurred due to employee dishonesty, such as theft, fraud, or embezzlement. This type of insurance is designed to cover the financial losses that a company may suffer as a direct result of dishonest acts committed by employees. It is particularly significant in environments where employees handle money or sensitive information, as it safeguards the organization from the risk posed by internal threats.

While other options may point to important aspects of business insurance, they do not capture the specific protective intent of fidelity guarantee insurance. For example, covering liabilities of employers broadly addresses legal responsibilities but does not focus on internal theft or dishonesty. Insuring against theft of money usually pertains to external theft scenarios, while ensuring compliance with trade regulations relates to legal adherence, which is outside the scope of fidelity guarantee insurance. Thus, the emphasis on protecting against employee dishonesty clearly delineates the unique role this insurance plays in the broader context of risk management in a business environment.