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Condo Association Insurance - Fidelity Bonding


Fidelity bonding: Sometimes called "crime coverage," "employee dishonesty coverage," or "fidelity bonding," this type of insurance is basically designed to protect against theft or embezzlement by employees, directors, management personnel, or others who might have access to association funds. It is important to understand that a property management company having its own fidelity bond may not be sufficient to protect an individual condo association. For condominium associations , there is a statutory requirement that the minimum amount of the fidelity bond be equal to the maximum amount of money that could be stolen (i.e., the maximum amount of money on deposit in all association accounts at any given time). Since this is a fluctuating number, the condo association should make certain that adequate coverage is in place, particularly in situations where large amounts of money may be at hand due to a special assessment. Although the law sets the minimum amount of coverage required, I think it is a good idea for the condo documents to contain a specific obligation for fidelity bonding, so that the layman board member who may not read the law will know from reading his or her condo documents that the bond is required.

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We manage several different neighborhoods that require these bonds. We use They are very reasonable.

posted @ Monday, May 31, 2010 8:47 PM by Bradley

Can you point me to the law that requires the board of a condo to have fidelity insurance

posted @ Monday, June 28, 2010 8:42 AM by Anthony Cantasano

Underwriter is holding up funding due to association not having a fidelity bond in place. Funding is through FHA. HOA states they do not have employees so therefore they don't have a fidelity bond. I live in the state of Washington. Can this loan be funded

posted @ Friday, November 05, 2010 12:23 PM by David Hayes

to David Hayes, That sounds like a no on the funding question. FHA has the requirement for funding a loan that you have fidelity coverage for HOA's with more than 20 Units sufficient to cover all funds on deposit (reserve) + 3 months of assessments or dues. It matters not that your HOA has no employees, the officers of the HOA board need the coverage as does your property manager if you have one. Jason Brown Licensed P&C insurance agent Washington State.

posted @ Wednesday, August 03, 2011 12:01 PM by Jason Brown

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posted @ Saturday, October 22, 2011 3:33 AM by moncler vests

How long does it take for a property management company to increase their fidelity bond insurance from say $100,000 to $129,000. How long would that process take? Thank You!

posted @ Wednesday, April 04, 2012 2:52 PM by Brad

@ Brad,  
Increasing your fidelity bond coverage should be a process that only takes a few minutes. However it does depend on several factors. If you are using a true bond and your agent does not have a direct online portal to modify the bond coverage, it may take longer than if you are using the Employee dishonesty coverage from and your agent has a direct portal to make this manual change to your associations' mater policy. Either way is acceptable for FHA. Using the Coverage on the master policy is likely less cost and faster than using a true bond.  
Jason Brown Licensed P&C Agent WA state, Specializing in commercial Insurance

posted @ Wednesday, April 04, 2012 3:06 PM by Jason Brown

Does a HOA that have only 7 units and no FHA loans need a Fidelity Bond? this HOA is not managed by the homeowners board.

posted @ Friday, April 13, 2012 2:07 PM by Shirley Bogan

@ Shirley, the HOA with 7 units and no FHA loans probably won't be asked to provide Fidelity Bond coverage by a lender but it would be a good idea to secure at least some coverage for "employee dishonesty" on the HOA master policy. The policy form of your carrier needs to include the HOA board members and the property manager in it's definition of an employee. Not every carrier includes these.  
Jason Brown Licensed P&C Agent Taylor Insurance Agency  

posted @ Friday, April 13, 2012 2:25 PM by Jason Brown

If the bank requires the management company to cover an amount for the bond and they are not covering the full amount requested, can the management company ask you (as the seller)to pay a fee so that they can increase the bond for your unit?  
Is paying them in order to close a sale, is that legal and will that have long term results to the buyer?

posted @ Thursday, April 19, 2012 11:16 AM by Angelica

@ Angelica, that would be very unorthodox and might be illegal depending on your state's condo code. The bond covers the entire HOA so the unit owner does not have exclusive interest in the increased cost. CC&Rs should protect a single unit owner from absorbing costs that bennefit the entire HOA. You should really have the HOA look for a master policy with a carrier that includes Board members and Property managers in the definition of employees for the employee dishonesty coverage. This qualifies as the fidelity bond for FHA and is much lower in cost than purchasing a stand alone bond.  
Jason Brown Licensed P&C agent specializing in commercial insurance. 206-363-1504

posted @ Thursday, April 19, 2012 11:29 AM by Jason Brown

When did Florida inact a Fidelity Bond requirement and in what law doc is it stated? What are the requirements in Florida as to the amount of coverage? What legal action is avalable and/or penalties for lack of or no fidelity bonding? Property Management that took over less than a year ago informed unit owners there is substantial amount of missing money and no way to recover it?

posted @ Saturday, June 16, 2012 12:00 AM by

I leave in NC, my HOA does not carry fidelity bond. I have been trying to refinance and pretty much every bank has rejected me because HOA does not carry fidelity bond. Is this required in NC, if not what is my option? Can I convince them to carry one?

posted @ Wednesday, October 10, 2012 4:05 PM by henry pos

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