The HOA Board Quarterly Summer 2014 Issue #10 | Page 13

Employee Dishonesty or Fidelity Bond - Need it?
By Michael Berg

T
H

ruthfully, and thankfully, the Employee
Dishonesty or Fidelity Bond purchased
by an HOA is rarely used. That is, when
compared to claims filed with an association’s
property and liability insurance carrier.

owever, because of the many different
terms used to describe the protection,
and forms in which the protection is
available, it can be a confusing piece of an
association’s insurance program.
The word “fidelity”
is defined as a
strict observance of
promises or duties.
Fidelity bonds and
Fidelity Insurance
are terms used by insurance carriers to describe
protection for the infidelity of persons with
access to association funds. Essentially, the
coverage protects an insured from dishonest
acts that typically include theft of money or
securities, forgery, burglary or fraud.
Another term, used mainly by insurance
companies that include the protection as
part of a package (i.e. a number of policies
under the same policy number – property,
liability, directors and officers liability), is
Employee Dishonesty. The confusion comes
with the fact, that, most often, an association
doesn’t have employees. In these cases,
it is important to review the definition of
employee in the insurance policy to ensure
the persons with access to association funds
are defined as “employees.” This includes the
property management firm.

Would this insurance apply to all of those?
No. Crime coverage applies to financial loss
only. The coverage is typically a broader form
than that available in a carrier’s property and
liability insurance package, and similar to that
of Fidelity Insurance. Along with theft, forgery
and alteration, coverage can be purchased to
protect property on - or off - premises, during
transfer, and counterfeit currency.
As with all insurance contracts, it is important
to read through each policy. Work with
your trusted insurance advisor to answer any
questions you have and gain the knowledge
you need to properly guide your association.
Michael Berg is President and CEO of Berg
Insurance Agency and may be reached at
[e-mail].
Contributed by Michael Berg, Berg Insurance
949.830.4590 x216
[e-mail]
or visit them at www.berginsurance.com

Perhaps the most confusing term used for
this type of protection is Crime coverage.
Why is it confusing? Well, consider the many
different kinds of crime that can be committed.
Summer 2014 | Issue #10 | The HOA Board Quarterly | 13