CPB Certified Professional Biller Certification Practice Exam

What is the purpose of bonding insurance?

1. To cover the cost of health insurance premiums

2. To guarantee repayment for financial losses from employee actions

3. To protect against natural disasters

4. To ensure employee health benefits

The correct answer is: To guarantee repayment for financial losses from employee actions

Bonding insurance serves as a financial safety net that guarantees repayment for losses resulting from the dishonest actions of employees, such as theft or embezzlement. This type of insurance is particularly important in industries where employees have access to cash or valuable assets, as it provides employers with assurance that they can recover from losses incurred due to employee misconduct. The focus of bonding insurance on protecting businesses from employee-related financial risks highlights its distinct purpose in the realm of risk management. By alleviating the financial burden of potential losses caused by employees, businesses are better positioned to maintain their operations without disruption.