CPB (Certified Professional Biller) Certification Practice Exam

What type of insurance guarantees repayment for financial losses resulting from the acts of employees?

1. Business Liability Insurance

2. Bonding Insurance

3. Health Insurance

4. Car Insurance

The correct answer is: Bonding Insurance

Bonding insurance is specifically designed to protect businesses from financial losses that may occur due to the dishonest or fraudulent acts of employees. This type of insurance involves a bond—a contract in which the bonding company agrees to compensate the business for these losses. It is often utilized to reassure clients and protect against theft, fraud, or other malfeasance by employees. In contrast, business liability insurance primarily addresses claims from third parties for bodily injury or property damage, rather than employee misconduct. Health insurance is focused on covering medical expenses for individuals, and car insurance deals with vehicle-related risks, neither of which directly addresses employee actions that could cause financial loss to the employer. Therefore, bonding insurance is the appropriate choice in this context, as it specifically covers the type of risk posed by employee actions.