A Fidelity Bond, also known as Crime Insurance, is a type of coverage that protects an HOA against financial losses caused by theft, fraud, or dishonest acts committed by individuals who have access to the association’s funds. This can include board members, volunteers, employees, or third-party vendors handling HOA money.
Why It Matters for Self-Managed HOAs
For self-managed HOAs—where board members and volunteers often handle finances directly—fidelity coverage is a critical safeguard.
- Protects HOA funds from theft, fraud, or embezzlement.
- Required by many banks when the HOA maintains reserve or operating accounts.
- Helps fulfill board members’ fiduciary duty to protect association assets.
- Reduces financial risk when multiple people have access to accounts.
- Provides peace of mind to homeowners regarding financial oversight.
For Treasurer personas, fidelity coverage is often non-negotiable when opening or maintaining HOA bank accounts.
How to Use It
“The HOA increased its fidelity bond coverage after expanding online payment access.”
Best Practice or Tip
- Confirm fidelity bond coverage limits meet or exceed the total amount of HOA funds on hand.
- Store insurance policies and renewal dates in HOA My Way’s document library.
- Review coverage annually, especially after changes in board members or financial access.
- Pair fidelity coverage with strong internal controls like audit trails and user permissions.
- Use HOA My Way’s accounting and permission controls to limit who can access financial systems.
Related Terms
