YOU BETTER HAVE INCREASED YOUR INSURANCE COVERAGE

This week on Condo Craze and HOAs, a caller remarked that while it’s great to have the owners sending in all of this money to the association to make all of these milestone repairs and have them send in millions of dollars to fund reserve accounts, there’s no guaranty that the money will be there in a few years from now when the association will definitely need it.  In other words, some owners are scared that some Board members or managers will be tempted to take some cookies out of the cookie jar and fly off to Tahiti.

It's certainly logical to be concerned that Board members or managers won’t be able to resist the temptation to grab six or seven figures from the association’s bank and leave without a trace.   It happens.  There’s always some story about it.  I have personally been involved in several of these cases of the years.

The Florida Legislature understands that theft of these funds may happen.  As a result, the insurance statute has made an important change for condominiums.  Here it is:

(h) The association shall maintain insurance or fidelity bonding of 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. Upon receipt of a complaint, the division shall monitor an association for compliance with this paragraph and may issue fines and penalties established by the division for failure of an association to maintain the required insurance policy or fidelity bond. As used in this paragraph, the term “persons who control or disburse funds of the association” includes, but is not limited to, those individuals 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 such bonding.

Board members you are now on notice.  Make sure you have the proper insurance, and in sufficient amounts.  It is imperative that you meet your insurance agent or at least pick up the phone, call your agent and confirm there is sufficient coverage.  I wouldn’t want to be a board member if millions get stolen but the board screwed up and never increased the employee dishonesty policy.  Stop what you’re doing.  Now.  And make the call.

Better yet, contact Assured Partners, as they are among the best in protecting condo and HOA communities with insurance.

Watch our recent episode of Condo Craze and HOAs for more on this topic.