HOA glossaryInsurance & operations

What is a fidelity bond?

Coverage protecting association funds against theft by directors, employees, or the management company handling them.

Also called: Crime coverage, Employee dishonesty coverage

Associations hold significant sums in reserves and operating accounts, often controlled by a small number of people. A fidelity bond covers loss from dishonest acts, and many governing documents and state statutes require one at a level tied to the funds held.

The coverage that matters most is frequently the extension to the management company and its employees, since that is where day-to-day access sits. Confirm the manager is covered under the association's bond or carries its own naming the association.

Coverage limits should track the maximum funds on hand, including reserves, rather than a figure set years ago when the community was smaller.

Why it matters to a board

Review the limit annually against actual balances, and confirm the manager's coverage in writing at each renewal.

Where the answer lives

Your recorded declaration and bylaws first, then the act that governs associations in your state. Whichever is stricter is the one that binds you.

Related terms

Fund accountingAccounting that segregates money by purpose — operating, reserve, and any special fund — so each is reported and controlled separately.AuditAn independent accountant's examination of the association's financial statements, at one of three levels of assurance.Management agreementThe contract between the association and its management company, defining scope, fees, term and termination.Master policyThe association's property and liability insurance covering the common area and, in many condominiums, the buildings themselves.Reserve fundMoney set aside over time for the scheduled repair and replacement of major common area components.D&O insuranceInsurance covering directors and officers against claims arising from their decisions in governing the association.
General information, not legal advice. This entry explains what the term means, not what your association must do about it. Any notice period, cure window, fine cap, vote threshold or deadline comes from your recorded declaration and your state's act — those differ in all fifty states and are amended every session. Updated August 2026. Confirm the current requirements with an attorney licensed in your state before acting.
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