A fidelity bond is a form of business insurance that offers an employer protection against losses that are caused by its employees' fraudulent or dishonest actions. This form of insurance can protect against monetary or physical losses. Fidelity bonds are often held by insurance companies and brokerage firms, which are specifically required to carry protection proportional to their net capital. Among the possible forms of loss a fidelity bond covers include fraudulent trading, theft and forgery. Although they are called "bonds," fidelity bonds are actually a form of insurance policy. They are typically designated as either first-party or third-party; first-party fidelity bonds are policies protecting businesses from wrongful acts committed by employees, while third-party fidelity bonds protect companies from similar acts by individuals employed on a contract basis.