Community Associations Crime Insurance

Submit Crime business on the Broker Connect portal here.

 

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• Admitted
• Available monoline
• Backed by an A.M Best Rating A+ XV
• “Cafeteria Style” option to choose a different limit and deductible for each insuring agreement
• Direct and agency bill
• Discovery Form
• Excess Crime
• Superior claims handling
• User-friendly Broker Connect portal for submissions

Available in all states except Illinois

No unit cap

Occupancy Types

• Condominium Associations (COAs)
• Homeowners Associations (HOAs)
• Planned Unit Developments (PUDs)
• Cooperatives (CO-OPs)
• Commercial Condominiums
• Mixed-Use Condominiums

• Managing agent endorsement

 

First-Party Coverage – Fraudulent acts committed by board members, employees, volunteers, or property managers.

• Employee Theft

Third-Party Coverages – Fraudulent acts committed by perpetrators not employed by or associated with the association.

• Forgery or Alteration
• Inside the Premises
• Outside the Premises
• Computer & Funds Transfers Fraud
• Money Orders and Counterfeit Money

• Flexible limit options for each insuring agreement
• Limits start at $10,000 and can be increased up to $5M
• Various deductibles are available up to $2M

• Berkley Insurance, A.M Best Rating A+ XV

Community associations are typically required in their bylaws to carry Crime and Employee Dishonesty (Fidelity) insurance to protect the money an association has in its operating and reserve accounts. The Employee Dishonesty portion of a Commercial Crime policy covers employee theft; for a community association, this should not only cover board members but also volunteers, community managers, management company agents, and temporary and leased employees. In order for coverage to kick in, an employee dishonesty claim must be deemed a theft; i.e., embezzlement, check fraud, invoice padding, etc. Coverage would not be provided for loss of funds that were simply “lost” by an employee without the requisite intent to steal.

It’s also important for insureds to understand that Commercial Crime insurance is not designed to cover a loss that is known before coverage is obtained, nor, similarly, a loss suspected beforehand. If an association suspects ongoing employee embezzlement and then purchases coverage, losses incurred prior to the policy being in place will not be covered.

Why are community associations targets of employee theft?

Many associations have a significant amount of money set aside for future capital expenditures including for improvements. Oftentimes, the associations are less active and have fewer eyes on this money, which makes them an easy target. There have been instances where the reserve account was split between different banks, CDs or other interest-bearing accounts. Individuals have submitted false or padded invoices, created false bank records, income statements, and used associations debit or credit cards for non-association purposes. In one case, for example, a former HOA manager in collusion with her ex-husband stole $3.8 million using falsified invoices for construction work.

Mitigating crime losses

There are steps an association can take to protect itself from employee theft and other types of commercial crimes that you can share with your insureds, including:

• Segregation of duties surrounding tasks such as deposits, bank reconciliations, check signing, inventory/property control, and wire transfer approval;
• Having annual comprehensive audits performed by an outside party (CPA firm);
• Countersignatures for checks;
• Use of “Positive Pay” or similar online banking control tool;
• Implementation of computer protections such as password controls and encryption of data;
• Physical access controls surrounding high-value property; and
• Procedures surrounding the approval and setup of vendors and client accounts.

The more communication and “checks and balances”, the better associations will be able to mitigate employee theft exposures.

• Berkley Crime Program Overview (Oct. 2024) click here to access