This is the coverage to protect the Communities money in the Operating Accounts and Reserve Accounts. The coverage protect from Embezzling, Check Fraud, Wire Fraud and 3rd party Crimes.
The requirement for Crime and Fidelity Coverage will come from the Covenants for the Community. In the Insurance section it will outline the requirement, and sometimes the amount of coverage. A rule of thumb is 3 months Operating Budget plus total amount in the Reserve Accounts.
Crime and Fidelity Coverage are stand alone policies. The main difference is in WHO IS COVERED. Crime and Fidelity’s definition of who is covered normally covers Board Members, Committee Members, Volunteers, Spouses, Accountants and Bookkeepers.
Be aware the Employee Dishonesty has a limited definition of who is Covered. Normally it is named Board members. It is a narrow definition of who and what is covered.
A Community should have Crime and Fidelity, Not Employee Dishonesty, to protect the Money the Board of Directors is responsible for.
Please have a review of your Communities Covenants done to see what Insurances you are required to carry.
Crime and Fidelity Insurance protects the actual money the Association has in the operating account and reserve accounts. Crime and Fidelity Insurance protects the money from embezzling, check fraud, invoice padding or false invoices, computer fraud and wire fraud.
What is the difference between Crime and Fidelity and Employee Dishonesty?
The difference is in the definition of “Who” is covered. Employee Dishonesty is similar to a Crime Bond. Both cover money being stolen, but most Employee Dishonesty insurance and bonds will only cover the employees. The employees of a non-profit HOA are the board members. Crime and Fidelity covers the following:
- present, past and future board members
- committee members
- accountants or bookkeepers
- community managers