What factor could influence the cost of a fidelity bond?

The cost of a fidelity bond is primarily influenced by the type of business and employee risks involved. Fidelity bonds are designed to protect businesses from losses due to dishonest acts committed by their employees, such as theft or fraud. The nature of the business plays a critical role in determining the level of risk represented; for example, a financial institution with numerous transactions may present a higher risk than a retail establishment with a simple cash register.

Furthermore, specific employee risks, such as the positions individuals hold, their access to sensitive information or assets, and any past incidents of dishonesty or claims, all contribute to assessing the potential exposure the bond must cover. Underwriters will evaluate these factors to establish premiums that reflect the likelihood of a claim, making this the most significant influence on the cost of a fidelity bond. Other aspects, such as the overall aesthetics of the business, its location, or the size of the customer base, do not directly correlate with the fidelity risks and thus are less impactful on the bond's pricing.