Who Must Be Covered by an Association Fidelity Bond?

Start with access, not payroll

Create a functional map of who can initiate payments, approve transfers, sign checks, change vendor details, receive bank alerts, reconcile accounts, or administer user permissions. Include backup and emergency access.

This exercise may identify directors, officers, employees, volunteers, managing agents, bookkeepers, and management-company employees. Use governing sources and contract language to determine how each role is treated.

Statutory lists vary

California Civil Code section 5806 addresses directors, officers, and employees and, when a managing agent or management company is used, requires protection for specified dishonest acts by that organization and its employees. Florida's cited HOA and condominium provisions refer broadly to all persons controlling or disbursing funds and expressly include certain officers and check signers without making that list exclusive.

These formulations are materially different. A board should not assume that naming officers satisfies a functional all-fund-controllers rule, or that a broad policy definition automatically meets a statute's express management-company requirement.

Examine third-party arrangements

A management company may hold money in an account, transact in an association-owned account, employ the people with access, or use a blended arrangement. Each structure should be compared with statutory and contractual requirements.

Do not rely solely on a vendor's certificate. Review whose loss the contract protects, which employees or agents fit its definitions, applicable limits and deductibles, cancellation notice, and whether the association has enforceable rights under the arrangement.

• Identify the legal owner and custodian of each account.
• Request the relevant coverage forms, not only a certificate.
• Compare manager coverage with the association's own contract.
• Address access promptly when personnel change.

Close naming and definition gaps

Compare the access map line by line with the policy's named insured and covered-person definitions. Ask how volunteers, noncompensated directors, temporary workers, outsourced bookkeepers, and manager employees are treated.

Document answers and any endorsement used to address a gap. For a loss, the facts, policy conditions, and complete policy or bond wording determine the result.