I was in court today, involved in a dispute about (among other things) inadequate unit owner access to association records and inadequate insurance. In response to my claim that the Association had no fidelity bond (as the Declaration required), the opposing counsel waived the Association’s Directors and Officers policy, arguing that its coverage was “the same” as that provided by a fidelity bond.
He’s wrong. I may need to hire an expert to testify to that, but you don’t need to. Ask your Association’s competent community association insurance agent, and they’ll tell you that the two policies are entirely different, and that your Association needs both.
A fidelity bond (sometimes called fidelity insurance, but often referred to in governing documents as a bond) provides coverage for “loss of money, securities, or any other property due to acts of dishonesty committed by an employee acting alone or in collusion with other persons…” Directors and Officers coverage, on the other hand, provides coverage for “mismanagement or [intentionally] wrongful acts.” The covered wrongful acts may have been intended, but if the intent was to steal from the Association, the Directors and Officers will not be there to help.
Lesson for today: Your Association should have Directors and Officers and fidelity coverage. If your insurance agent tells you otherwise, it’s time to find a new insurance agent. Look at the resource directory at the UCCAI web page for a list of agents specializing in community association insurance.
And if your attorney tells you otherwise, you know where to find a new attorney. 😉