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Why HOAs and Condo Boards Need "Crime Coverage"

Crime Coverage - also known as a "Fidelity Bond" or "Fidelity Guarantee," is a form of insurance coverage that protects against fraudulent acts - like embezzlement - committed by Board Members or Property Managers in a condominium or HOA-managed community.

As you know, home and unit owners in association-run communities pay regular dues typically in the form of HOA fees. Over time, these fees add up to a significant sum and Board Members usually have access to that money.

Florida Statute 718.111 mandates every condo association have Crime Coverage in place to protect these funds. Coverage must equal the total estimated amount of funds controlled by the Board or Association Members at any given time.

This coverage can be ratcheted up or down throughout the year as well, so if you complex decides to add a special assessment one year for a major project, coverage can be adjusted accordingly.

Board Members have a fiduciary relationship with the homeowners that have elected them and are trusted to be good stewards of their funds, so if you are a member of an HOA or Condo Association Board, be sure your group has secured this coverage in an amount that is appropriate for the community, to stay in compliance with State Statute.

Dishonest Board Members are few and far between, but unfortunately embezzlement does happen. And the cost of this mandatory "crime insurance" is minimal - only few hundred dollars for most communities. Many won't even notice a change from the prior year in their HOA bill. Yet, your Board and your residents' funds will be protected.

If you're not sure if your association has a Fidelity Bond, or wish to inquire about what level of coverage your community may need, contact us anytime

Kirk Ball is Principal Agent & Owner at Wren Insurance.