Members of a condo association board may work together and even become close friends, but there is always room for controversy and complaints amongst members. Even with camaraderie and friendliness, fidelity bond or condo association fidelity insurance is an important piece of coverage in condo association insurance.
Some board members of a condo association may try and take advantage of where they stand on the board. This can be executed through embezzling money, which can actually be more common than you’d think. Here’s how condo association can protect themselves from potential loss through comprehensive condo association fidelity insurance.
Embezzlement and Detection
There have been high profile embezzlement cases among HOA and condo associations before. It’s not unheard of to learn of a $4 million scheme here or a $2.5 million case there. There are some very comprehensive ways to protect a condo association from these controversies, keeping everything above board and all board members honest and accountable.
Condo associations should always have more than one person responsible for finances and require double signatures on checking accounts. Also, a committee from a board can help to reconcile expenses on a monthly basis. If there are any discrepancies, it should be encouraged to inquire about anything that may seem off.
Taking these basic steps can help to create an environment of respect and honesty amongst members. But let’s also take a look at condo association fidelity coverage.
Condo Association Fidelity Coverage
This kind of condo association fidelity insurance can protect a condo association from employee theft, such as embezzlement. A policy is normally equal to the number of funds accessible or controlled by a board. Since budgets can change on an annual basis, it is important that this kind of protection is looked over once a year. Fidelity coverage isn’t included in a master policy for an association, so it’s important that condo associations inquire about the coverage with their insurance providers.
Not all policies are made the same, however. It’s important to note the provisions that can be included in this kind of coverage. First off, the embezzlement is only considered if it is an employee-based theft. If the person who is stealing is not an employee, their theft will only be covered if an endorsement has been added to the policy in question. The loss has to be related to the theft, which means there must be intent on the part of the individual(s) who took the funds. Errors and omissions happen, but if the person did not intentionally steal the funds, coverage will not apply.
Also, what’s stolen must be a covered item. Be sure to be aware of what exactly a policy covers. It may cover cash but not other assets.
Condo associations need to make sure they’re protected against employee dishonesty and having the proper coverage for a condo association is the only way to ensure this.
About American Team Managers Insurance Services
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