Is Your Homeowners Association Protected by Fidelity Insurance?

Homeowners associations are extremely vulnerable to financial losses due to the dishonesty and theft or embezzlement by the association’s officers, directors, employees and management personnel. To protect against the exposure to such losses, homeowners associations should carry “Fidelity Insurance” or “Employee Dishonesty Insurance.” Such insurance is not typically automatically included in an association’s master insurance policy or other types of specified coverage, so it is important for association directors and management personnel to confirm with their insurance agents that this important insurance coverage is obtained.

When fidelity or employee dishonesty insurance policies are purchased, the policy language should be reviewed to make certain that the coverage extends beyond employees and includes board members, committee members, bookkeepers, property managers (principals and employees), and all others who have access to the association’s funds. If the policy in question does not include coverage for the acts of management company personnel and the association utilizes a property management company, the association’s directors should seek the addition of coverage for management personnel through an optional rider to their insurance policy that provides such coverage.

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