What is the primary function of "fidelity bonds"?

Fidelity bonds primarily serve to protect businesses from losses that result from employee dishonesty, which includes acts such as theft, fraud, or embezzlement. By providing coverage in this area, fidelity bonds help maintain trust and financial stability within an organization, ensuring that the business can recover from potential losses caused by dishonest actions of its own employees.

This type of bond is especially valuable for businesses that handle significant amounts of cash, confidential information, or assets, as it acts as a form of insurance against the risk of internal fraud. The bond specifically covers the dishonest acts committed by employees, which is why it is the correct answer in this context.