What does a fidelity bond primarily protect employers against?

A fidelity bond is designed specifically to protect employers from losses associated with employee dishonesty or theft. This type of bond serves as a form of insurance that compensates the employer for financial losses resulting from fraudulent acts committed by employees, such as embezzlement or theft of company property.

By requiring employees to be bonded, employers mitigate the risk of financial harm resulting from dishonest actions. This bond provides a safety net, ensuring that if an employee engages in theft or fraudulent behavior, the company can recover some financial losses through the bonding company's compensation.

The other options pertain to different areas of risk management. Performance failures by contractors are typically covered under a surety bond, which guarantees the performance or fulfillment of a contract, rather than employee actions. Claims due to regulatory violations are the concern of liability insurance or specific types of insurance geared towards compliance with laws and regulations. Damage from natural disasters is generally covered by property insurance, which protects physical assets from events outside the control of the business, such as floods or earthquakes. Thus, the primary focus of a fidelity bond remains on safeguarding against employee dishonesty or theft.