The members of a condo association board are often friends and usually neighbors. They work together to create a safe and positive place to live. Despite the comradery often experienced among board members, fidelity bond or fidelity insurance is important to condo associations. Unfortunately, some board members of the condo association may try and take advantage of their position, even embezzling association funds. In fact, it happens more often than one might think. Here’s how condo associations can be protected from potential loss with a condo fidelity bond.
Embezzlement in the world of condominium associations
Many will remember the high-profile case of Andrew Kissel, who elaborately embezzled $3.9 million while serving as treasurer of a high-end condominium association in Manhattan in the late 1990s and early 1990s. 2000. His sad story ended in a highly publicized homicide. however, embezzlement in the condominium association world often has a less sinister appearance. As recently as 2010, Edward M. Richards, a 55-year-old Brockton native, stole more than $100,000 simply by not paying his bills. Eventually, other condo members realized money was missing and Richards confessed to 4 years of embezzlement in his kitchen.
how to protect your association
there are some simple precautionary steps that can be taken to avoid stories like kissel and richards. here are some guidelines to follow:
- always have more than one person responsible for finances
- require double signatures on checking accounts
- have a committee to reconcile monthly expenses
- politely ask about apparent discrepancies
- must be employee theft: if the person who is stealing is not being compensated for their actual role, their theft will only be covered if an endorsement has been added to the policy .
- The loss must be related to theft: This means there must be intent on the part of the person who stole the funds. If the funds were lost due to errors or omissions, but the person did not intentionally steal them, coverage will often not apply.
- Must be a covered item: Make sure you know exactly what your policy covers. it can cover cash but not other assets. it’s important to make sure you have the right coverage for your particular association.
Implementing these practices will go a long way in protecting your association and its members from potential loss.
condo fidelity bond coverage
In a nutshell, fidelity insurance protects the condominium association from employee theft. policy is normally equal to the number of funds accessible or controlled by the board. Because budgets can change annually, it is important that this coverage is reviewed at least once a year. fidelity coverage is not automatically included in an association’s master policy, so it is imperative that the board check with their insurance provider to ensure they are properly covered.
There are variations between the policies, but the association should consider the following provisions.
Make sure your condo association is protected from employee dishonesty. having the proper coverage for your condominium association is the only way to guarantee this. You can start by implementing simple steps to get a second set of eyes on your association’s finances. once you’ve done that, review your current policies and needs with an h&k insurance expert. contact us about any questions you have. Our team of experts would love to help make sure you have the right condo fidelity bond coverage.