Understanding Crime And Fidelity Insurance For HOA

Crime and fidelity insurance for HOA is a vital safeguard that protects your association funds from embezzlement and fraud. HOA board insurance is an important matter, and that’s why every board member should be familiar with the homeowners association insurance requirements for their unique situation. Community managers can give their members peace of mind by starting with an understanding of what is fidelity insurance coverage and how it will help them in the event of legal and financial issues.

Understanding Crime and Fidelity Insurance for HOA

When they don’t have the proper insurance on the books, unexpected litigation and claims can end up costing them thousands or even millions of dollars in the long run. To get a better grasp on what fidelity insurance coverage entails, it helps to look into the specific applications for crime bonds and fidelity bonds.

In this article, we go into the details of what crime and fidelity insurance is and what it applies to. An HOA management company can use this information to improve their crime and fidelity insurance coverage, and in so doing, keep their members and managers protected in the case of crime and theft.

Why Your Association Needs Crime and Fidelity Insurance for HOA

A typical homeowner’s association will have money in its operations and reserve accounts. These accounts are crucial for maintaining the services that the HOA provides for their community. Unfortunately, when there is money involved, so is the possibility of theft, fraud, and other financial crimes. A comprehensive crime and fidelity insurance for HOA is a crucial HOA policy designed to protect this money as well as those responsible for managing it.

a burglar tries to break in with an open window with a crowbar | fidelity insurance coverageThe larger the community association, the more money it will have in its accounts. That’s why homeowners association insurance requirements differ from one HOA to the next. One thing that all associations have in common, however, is the need for HOA board insurance to protect the money they worked hard to collect and administer.

Read more: Whats the Difference Between Fidelity Bonds and Crime Insurance?

Many associations will have huge amounts of money set aside for major repairs and capital improvements. Considering the cost of a community pool upgrade or a new high-rise condominium roof, these sums need to accumulate to large amounts before they can be useful.

When you consider the huge amounts of money that an association is responsible for, it readily becomes apparent that many associations are faced with a difficult choice. Should they have several people managing the association funds to ensure check and balance? This can lead to inefficiencies and also makes it more likely for someone to abuse their access to the funds.

On the other hand, having just one person manage the funds also opens up the possibility of the funds being misused, given the lack of oversight.

Fortunately, there are many ways to set up checks and balances so that the association can protect its funds. Regular audits, safe banking practices, and the use of bank control tools will mitigate a lot of the risks involved.

A crucial piece of this protection is crime and fidelity insurance for HOA. This HOA policy is specifically geared towards safeguarding the money in your association accounts in the event of a crime. Embezzling, check fraud, wire fraud, computer fraud, false invoices, and invoice padding are real possibilities with the amount of money involved with an HOA. It’s only prudent to plan ahead.

How Much Crime and Fidelity Insurance Coverage for Your HOA?

Read more: What is Crime and Fidelity Insurance?

How much HOA policy for crime and fidelity should the association carry? The association should look into the state law if there is one that will be applicable to them. Aside from the state law, the HOA by-law should also provide a guide for determining the right amount of crime and fidelity insurance for HOA they should carry given their current amount of funds and other factors.

When it comes to the types of crimes they need to have an HOA policy for, that is up to the HOA board to determine. As with any set of homeowners association insurance requirements, proper research should be done before the association commits to buying a fidelity bond or a crime bond.

Crime and Fidelity Insurance for HOA VS Employee Dishonesty — What’s the Difference?

man with fingers crossed shaking hands with partner | what is fidelity insurance coverageCrime and fidelity insurance for HOA is often referred to when someone mentions fidelity bonds. Employee dishonesty insurance, on the other hand, is more similar to a crime bond. Both HOA policies will protect the association funds, and they also cover similar crimes.

What sets apart a fidelity insurance coverage from an employee dishonesty insurance policy is the members covered. Employee dishonesty insurance, as the name indicates, will usually cover just the employees of the association. In a typical non-profit HOA, the employees include the board members.

Crime and fidelity insurance for HOA, on the other hand, has a much wider range in terms of the people it covers.

What Is Fidelity Insurance Coverage Applicable To?

  • Current HOA Board Members
  • Past HOA Board Members
  • Future HOA Board Members
  • HOA Committee Members
  • HOA Community Managers
  • HOA Accountants and Bookkeepers
  • Volunteers
  • Spouses

Read more: Crime Insurance and the Distinctions between Fidelity Bonds, Liability Coverage, and Errors and Omissions Insurance

If an employee is the one to steal money from the association, Employee Dishonesty Insurance and Bonds will typically be the one to cover the loss. Crime and fidelity insurance coverage include four other types of theft from the HOA association. These are check fraud, computer fraud, wire fraud, and the physical act of taking away money.

It is also important to include third-party crimes. This covers an event in which a person who is not affiliated with the association steals money. Every policy will come with different deductibles and limits.

Thinking of Getting Crime and Fidelity Insurance for HOA? We Can Help

The board members of an HOA management company may be familiar with insurance, but there’s nothing like an expert to ensure the proper procurement of this important HOA policy. It is not always easy to understand just what type of insurance your association really needs. It’s important to talk to and get counsel from an insurance agent who is well-versed in this type of insurance law to commit to the best plan for the company.

HOA board members should also carefully look through their association’s governing documents to find specific insurance requirements for their Association. The HOA should be meeting every necessary requirement set forth by the state statutes and by making sure that all state, federal or local laws apply.

We at Cedar Management Group can help you navigate the state requirements and your governing documents, so you can have the Crime and Fidelity Insurance for HOA that will best protect your funds.


  • Is Getting D And O Insurance For HOA Boards Necessary?
  • Understanding Crime And Fidelity Insurance For HOA
  • HOA Insurance Policy: Why Your HOA Really Needs One

Through this article, we hope to help you understand Crime and fidelity insurance

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