Prior to July 1 2013 HOA's were not required to carry Crime Insurance or a Fidelity bond.
Florida Statute 720.3033 section 5 reads:
The association shall maintain insurance or a fidelity bond for all persons who control or disburse funds of the association. The insurance policy or fidelity bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time. As used in this subsection, the term “persons who control or disburse funds of the association” includes, but is not limited to, persons authorized to sign checks on behalf of the association, and the president, secretary, and treasurer of the association. The association shall bear the cost of any insurance or bond. If annually approved by a majority of the voting interests present at a properly called meeting of the association, an association may waive the requirement of obtaining an insurance policy or fidelity bond for all persons who control or disburse funds of the association.
There are still many HOA's out there that have not caught up with this Law. Do your self a favor let us take a look at your policy to make sure you are covered and compliant with the law!
EMERGE INSURANCE AGENCY
While nearly all HOAs have some type of policies on the books, many HOA boards have little or no idea what type of insurance they have or need. This can potentially lead to expensive litigation and claims that can cost your homeowners association thousands, and sometimes even millions of dollars.
There are certain types of insurance your homeowners association should have including: building/property insurance, general liability insurance, director’s and officer’s insurance, workers compensation coverage, and fidelity insurance. This is written to be bring some clarity to crime and fidelity insurance.
What is Crime and Fidelity Insurance?
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:
Employee Dishonesty Insurance and Bonds usually cover money stolen by an employee. Crime and Fidelity Insurance will cover the four main types of stealing from an Association which are taking of the actual money, Check Fraud, Wire Fraud and Computer Fraud. 3rd party crimes, meaning, the person taking money is not affiliated with the association, would also need to be covered. Each policy will have different limits and deductibles.
HOA board members typically aren’t insurance experts. In fact, insurance and knowing exactly what your Association needs can be difficult to understand. That’s why it’s crucial you consult and get counsel from a licensed insurance agent, or agents, to help put your insurance plan in place.
It’s also important to read through the Association’s governing documents to look for specific insurance requirements of your Association. Also make sure your HOA is meeting all the necessary requirements by examining the state statutes and determining the local, state or federal laws that apply.
EMERGE INSURANCE AGENCY
As a member of your homeowners association board (HOA) you may ask, "Do we need insurance?" The answer is a big yes! The more pertinent inquiry would be, "What types of insurance does our HOA need?" It is vital that your organization has the proper insurance coverage for all possible types of problems.
Some sobering facts
Only about half of homeowners associations maintain their insurance policies. Of that half only 25% maintain adequate coverage. While nearly all HOA's have some type of policies on the books most groups have no idea what they have. This can lead to expensive litigation and claims that can cost your homeowners association thousands, and sometimes even millions of dollars.
What can you do as a Board member?
The fact is insurance is one of the best investments an HOA can make. It is up to you and your board to make sure your Association is properly covered for all contingencies.
There are insurance agents and agencies that specialize in HOA coverage. These professionals can work with you to tailor a plan that fits the unique needs of your homeowners association. There is no better peace of mind than knowing your organization has adequate insurance coverage in force.
What types of insurance do you need?
There are several types of insurance coverage that your homeowners association should carry. If you maintain this coverage your Association should be protected from almost all issues that arise. Let's take a look at the coverage:
If your HOA owns property then it should protect it. This type of coverage does just what is says; insures the property. This policy will cover against vandalism, theft and damage from fires, storms and natural disasters.
This will cover things like accidents or injuries that take place on the property. Your HOA could be liable for actions it took, or did not take. Associations should take actions to correct any safety issues, especially in today's world where lawsuits are all too common.
Directors and officers liability insurance
This is more commonly known as "D&O" coverage. This protects officers and trustees from being held liable when performing their duties for the Association. The D&O policy helps fund this requirement. It protects officers and trustees when they err accidentally and without malice. It does not cover willful acts of wrongdoing.
This coverage protects the organization from theft committed by employees, contractors, Association members/volunteers, or even management companies. This should be part of your Association’s overall insurance package.
There is a worker’s compensation insurance that you should consider if you do not already have it. This is to cover your volunteers, like Board members or others that give their time to do something for the Association without pay, like changing light bulbs for instance. It does not take the place of the worker’s compensation insurance that your contractors should carry.
The types of coverage listed above should protect your homeowners association from most insurance issues it can run into. It is better to have more coverage than not enough.
Of course, you and your Board members may not be insurance experts. It is essential that you consult and get counsel from a licensed insurance agent, or agents, to help put your insurance plan in place. There is no substitute for proper insurance coverage.
Protect your homeowners association
When you became a Board member you promised to serve your association and protect it. Certainly, helping to make sure your organization has the proper insurance coverage to protect it against all sorts of issues is part of your duties.
Along with the rest of the Board, make sure that your insurance coverage is up to date and comprehensive. Be diligent about your homeowners association's insurance and be adequately protected from many potential problems.
EMERGE INSURANCE AGENCY
Cecil Williams -