Insurance/Fidelity Bond Minimum Requirements

Question:

What are the minimum requirements for insurance/fidelity bond for a 10 Unit condominium with $50,000 in reserves and annual receipts $60,000?

 

Answer:

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Your question is a timely one, as the requirements for fidelity bonds were modified by statutory amendments that took effect in 2008.  Specifically, Virginia Code § 55-79.81(B) was changed so that it now reads:

        B. Any unit owners' association collecting assessments for common expenses shall obtain and maintain a blanket fidelity bond or employee dishonesty insurance policy insuring the unit owners' association against losses resulting from theft or dishonesty committed by the officers, directors, or persons employed by the unit owners' association, or committed by any common interest community manager or employees of the common interest community manager. Such bond or insurance policy shall provide coverage in an amount equal to the lesser of $1 million or the amount of reserve balances of the unit owners' association plus one-fourth of the aggregate annual assessment of such unit owners' association.  The minimum coverage amount shall be $10,000.  The executive organ or common interest community manager may obtain such bond or insurance on behalf of the unit owners' association.

Based on the facts provided in your email, I calculate that the blanket fidelity bond or employee dishonesty insurance policy must provide coverage of at least $50,000 (reserves) plus $15,000 (one-fourth of the aggregate annual assessment), for a total of $65,000.