How Much Employee Dishonesty (Crime/Fidelity) coverage should we carry?
The secondary lending institutions (Fannie Mae and Freddie Mac) suggest carrying a bond equal to three (3) months’ worth of the association’s annual operating expenses, plus one (1) year’s worth of reserves. The limit may also be a specific amount as called for in the association’s bylaws. No matter what limit is carried, make sure that all parties that have access to and control of the association’s funds are insured by this policy. In addition, ensure that check-signing controls are in place (reviewing canceled checks, making certain that checks drawn from the operating account are budgeted/accounted for), and that access to the reserve account is limited to board members.
