Definition of Fidelity and guaranty insurance
A contract of fidelity or guaranty insurance is one whereby the insurer, for a valuable consideration, agrees, subject to certain conditions, to indemnify the insured against loss consequent upon the dishonesty or default of a designated person. Guaranty insurance, used in its broad sense, also includes credit insurance, and title insurance, as well as the numerous forms of surety bonds.
The contract partakes of the nature both of insurance and of suretyship. Hence, even in the absence of terms so providing, the contract is avoided by the failure of the insured to disclose to the insurer, at the time of making the contract, 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. But the insured is not required to give notice of mere irregularities not involving moral turpitude; nor, in the absence of agreement to that effect, does the insured owe to the insurer any duty of watching the conduct and accounts of the employee concerned.
That's the definition of Fidelity and guaranty insurance in Black's Law Dictionary 6th Edition. Courtesy of Cekhukum.com.
