Why a Fidelity Bond is key to protecting your HOA or Condo Association


Homeowner and condo associations are usually made up of members of the community. They are your neighbors and friends looking out for the best interests of every resident. However, the power associated with being a board member has the potential to be abused.

Acts of dishonesty, such as fraud and embezzlement of association funds, are unfortunately common within HOAs and condo associations. For this reason, associations purchase Fidelity Bonds to serve as protection against loss.

HOA meeting with neighbors and friends
An HOA is comprised of your neighbors and friends. A Fidelity Bond is protection against financial loss due to fraud or theft by a member.

What is a Fidelity Bond?

A Fidelity Bond is an insurance policy designed to protect the principal, in this case, the association, against bearing financial losses due to theft or fraud by members within the association. There are different types of Fidelity Bonds with different clauses, so be sure to get a policy that meets your association’s needs.

Acts of dishonesty a Fidelity Bond may cover:

  • Check Fraud

  • Computer Fraud

  • Invoice Padding

  • Larceny

  • Wire Fraud

A Fidelity Bond is vital to ensure an HOA or Condo Association doesn’t suffer from internal theft and fraud.

How much coverage does an HOA need for a Crime Policy?

When determining the bond amount for your coverage, there are a few variables to consider.

For example; Does your state require a Fidelity Bond?

Some states, such as California and Florida, require HOAs have a Fidelity Bond with a bond amount equaling the total available funds. Your bond amount could be greater if your HOA’s governing documents require a larger bond amount.

blue condos
Does your state require your condo association to have a Fidelity Bond?

Another factor is the number of individuals who have access to the funds to be included in the policy. If you’re unsure of the minimum bond requirement for your association, the best way to find out is to review your state’s legislature and your association’s rules.

How much does a Crime Policy / Fidelity Bond for a Homeowner Association cost?

The cost of your Fidelity Bond depends on the bond amount and number of individuals to be included in the coverage. The higher the bond amount and number of members means more risk is associated with the policy. However, the cost of the coverage is relatively inexpensive when compared to the full amount of the bond.

Our Fidelity Bonds start at $100. When requesting a quote for a Fidelity Bond, make sure your policy includes all the coverage you need to be in compliance with the state and/or your association.

Also, don’t overpay for your policy by including coverage you don’t need. Keep your costs down by excluding coverage not applicable to your association.

Who does the Fidelity Bond cover?

Fidelity Bonds typically only cover current employees, not unpaid volunteers. However, HOA and condo association members of the board and committee are often made up of unpaid volunteers.

When shopping for your Fidelity Bond, you may want your policy to cover current and previous employees, including volunteers, accountants and community managers. If you have any questions about selecting the coverage that best suits your needs, send us a message, email us at info@suretysolutions.com or call to speak with a client service agent at (866) 722-9239.

What happens if a claim is made?

The surety company that issued your bond will perform an investigation if a claim is made on your policy. When a claim is found to be valid, the surety will payout on the policy up to the full bond amount. However, please note most policies only payout if the employee is convicted of the crime.

This means a report must be filed with the police to receive a payout on the policy. Often, the convicted individual is a close friend or relative, making police involvement difficult for the plan holder. A conviction clause is not always associated with a Fidelity Bond, so review your options for coverage to ensure your policy fits your situation.

Prevent fraud within your association by following these 3 helpful tips

HOA Fidelity Bond
Follow these 3 tips to reduce risk of fraud within your HOA.

Make policies for receipts when using cash

This may not be an issue if cash is rarely handled by your association. But, if cash receipts are frequently used; create policies for regular cash counts and registers used for bank deposits.

Implement additional procedures if managers or treasurers receive cash to deliver to the bank.

  • The individual receiving cash should not be signing checks and reconciling the bank account.


  • Utilize a verification trail to verify the total cash amount is deposited into the correct account.


Ideally, your association should require checks or money orders in place of cash.

Require at least 2 signatures for payments

Requiring multiple signatures for every check coming in is an inconvenience. However, by enforcing at least 2 signatures for payments, the association’s risk of fraud occurring significantly drops. Having at least 2 parties verify the collection of payment is more secure than just 1 individual.

If you have a bookkeeper or management company involved with signing checks for bills; make a discreet list of items they have authority to approve. When a large amount of money is a factor, a specific account for payments made by management should be implemented. All other accounts should be exclusive to board member signatures.

Get a lockbox with your bank

Contact your bank to set up a lockbox service to store assessments. By doing so, payments from homeowners are sent directly to the bank via mail.

Then, these payments are deposited into the HOA bank account; preventing the involvement of more hands in the process. Ultimately, this means there is less risk of a member misusing or taking the funds.

Where to get a Fidelity Bond for an HOA or Condo Association

Our Surety Solutions, A Gallagher Company team looks forward to assisting you with getting your Fidelity Bond. By partnering with top surety companies, we’re able to provide competitive bond quotes. And as important as finding a great deal on your bond is, finding a policy that meets your needs without having to pay for coverage you don’t need is just as important.

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Let us know if you have any questions. Contact us here, send us an email to info@suretysolutions.com or call our office at (866) 722-9239 to speak with an agent, today. We look forward to helping you meet your Fidelity Bond needs.

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About Surety Solutions, A Gallagher Company

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Beau Chipman

Beau is the Marketing Content Developer at Surety Solutions, A Gallagher Company. He creates content about all types of surety bonds, including mortgage, court, lost title, contractor, fidelity, ERISA and many more.

This Post Has One Comment
  1. It’s good to know that the surety company that issues the bond will do an investigation if a claim is made. I thought I would have to do this on my own. So knowing that a company will help me is a huge relief.

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