Critical Insurance Polices for HOAs > Crime & Fidelity Bonds
Every year, workplace crime costs the U.S. economy over $50 billion. While this frightening figure might conjure up images of Hollywood-inspired white-collar crime, it is not corporate America or even the much-maligned big banks who bear the brunt of this rising trend. Unwitting criminals assume small- and medium-sized businesses, like homeowners associations, are too naive to know how to protect themselves or don’t have the legal resources to battle it out. According to CNBC, small- and medium-sized businesses make up 68% of employee theft cases with a median loss of $289,864.
With the sizable bank account balance HOAs collect and save for future community improvement, it is no wonder they are prized pickings for the less scrupulous among us. Another key risk factor is that HOA boards are often run by part-time volunteers, who themselves have their own day jobs in other fields, with outsourced—and often off-site—management. Criminals assume their pilfering will be overlooked in the disinterested, overworked, or complicated bureaucracy of HOA management.
How Crime and Fidelity bonds can save a homeowners association
The above risk factors make crime and fidelity bonds an essential part of any comprehensive homeowners association insurance plan. These bonds provide insurance against employee dishonesty in several forms, such as:
- Check fraud
- Vendor fraud
- Falsified invoices
- Computer fraud
- Wire fraud
- Unauthorized or personal use of HOA debit or credit cards
The above acts have one thing in common—the loss is directly linked to liquid assets. Property and other non-liquid assets, such as stock certificates, may not qualify unless covered by a policy expansion.
What if these acts are not committed by an employee?
HOAs are unique in their conventional use of unpaid staff. It is important for HOA boards to note that fidelity bonds typically only cover paid employees, not volunteers or otherwise unpaid board and committee members. To include unpaid workers, fidelity or “employee dishonesty” bonds typically require the purchase of an expansion. In most cases, this expansion can be rolled over into a crime bond that protects against not only employee theft but against acts committed by past board members, spouses of board members, accountants, bookkeepers, and other individuals more tangentially associated with the HOA.
How much is homeowners association insurance for crime and fidelity bonds?
The cost of crime & fidelity bonds is based on the number of people associated with the board’s finances as well as a single count for the management company. The costs are very reasonable considering the payout when a claim is submitted, typically costing between $250 to $1000 per year for up to $500,000 worth of coverage.
Crime & Fidelity bonds are a no-brainer for HOAs
Crime and fidelity bonds are an easy sell as part of a comprehensive homeowners association insurance plan when HOA boards see a cost-benefit analysis combined with reports on the high risk of significant losses associated with dishonest employees.
About Kevin Davis Insurance Services
For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our President Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (877) 807-8708 to speak with one of our representatives.