A fidelity bond is a form of insurance protection that covers policyholders for losses that they incur as a result of fraudulent acts by specified individuals. It usually insures a business for losses caused by the dishonest acts of its employees. These insurance policies protect from losses of company monies, securities, and other property from employees who have a intent to cause the company loss.

ERISA is the Employee Retirement Income Security Act, a federal law enacted in 1974. ERISA established minimum standards for plan administrators and investment advisers to protect employee pension and health plans in the private sector. ERISA requires that plan officials who manage, oversee, recommend or handle funds or other property of an employee benefit plan must be covered by a personal fidelity bond, according to the U.S. Department of Labor. The bond purpose is if a plan official commits fraudulent or dishonest acts, his bond ensures that the pension or health fund can recover some of its losses. The bond only pays if the fraudulent administrator is financially unable to meet his obligations.

A surety bond is a contract between three parties—the principal (you), the surety (them) and the obligee (the entity requiring the bond)—in which the surety financially guarantees to an obligee that the principal will act in accordance with the terms established by the bond.