Does this apply to my association?
Coverage starts by the first sale to someone other than the developer and continues each year. A community is exempt only when it has four or fewer owners or units and its three-month amount is under $2,500.
What coverage does my association need?
HOA requirements
Homeowners association
- Does this apply to my association?
- Applies unless both: the HOA has four or fewer lot owners and three months’ gross annual HOA fees are under $2,500.
- How much coverage do I need?
- Minimum = lesser of [(three months’ worth of gross annual HOA fees) + (total in all investment accounts when the policy/bond is issued)] or $3,000,000.
- What should I prepare?
- Add both parts of the formula. Investment balances are measured when the policy or bond is issued. The law does not give a date for measuring fees or a policy length.
- Who and what must coverage include?
- Loss from fraud, dishonesty, or criminal acts or omissions by fund-controlling officers, directors, managing/operations/maintenance agents or employees, and a management company employing them.
- Are there exceptions or waivers?
- Owners cannot choose to waive coverage. The small-HOA exemption applies only if both requirements are met.
- When do I need coverage?
- Buy coverage by the first lot sale to someone other than the developer and keep it each year after that.
- What records do I need?
- Keep a copy of the policy or bond in association books and records available under § 11B-112. No state filing is stated.
Condominium requirements
Condominium association
- Does this apply to my association?
- Applies unless both: the condominium has four or fewer units and three months’ gross annual assessments are under $2,500.
- How much coverage do I need?
- Minimum = lesser of [(three months’ worth of gross annual assessments) + (total in all investment accounts when issued)] or $3,000,000.
- What should I prepare?
- The law does not give a date for measuring annual assessments, a policy length, or a separate renewal filing requirement.
- Who and what must coverage include?
- Loss from fraud, dishonesty, or criminal acts or omissions by fund-controlling officers, directors, managing/operations/maintenance agents or employees, and employing management companies.
- Are there exceptions or waivers?
- Owners cannot choose to waive coverage. The small-condominium exemption applies only if both requirements are met.
- When do I need coverage?
- Buy coverage by the first unit sale to someone other than the developer and keep it each year after that.
- What records do I need?
- Policy/bond copy belongs in records available under § 11-116. No government filing is stated.
How do I prepare to buy?
Check both parts of the small-community exemption. If either one is not met, coverage is required.
Calculate one quarter of gross annual HOA fees or condominium assessments.
Add total balances in every investment account at policy issuance, then cap the result at $3,000,000.
Confirm all listed fund handlers and management companies are covered and retain the policy or bond in association records.
Common Questions
What is Maryland’s exact coverage formula?
The lesser of $3,000,000 or three months of gross annual fees/assessments plus all investment-account balances when coverage is issued.
Is every four-unit community exempt?
No. It must also have a three-month gross annual fee or assessment amount under $2,500.
Does fidelity insurance include a bond?
Yes. Both Maryland provisions expressly include a fidelity bond within fidelity insurance.
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