fidelity bond amount

Started by TimB4 • 1 replies • 1354 views

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TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By DianneL1 on 07/13/2011 5:43 PM
Our condo association is going through the FHA Approval process right now. As a surprise to us, they required us to raise our fidelity coverage (in our master insurance policy) to match our net worth - which includes the money you have in reserves. We had to raise the amount from $50k to $160k. This added $500 to our premium. If we add $20k more to reserves this year, we'll need to up that coverage again.
Hope this information is helpful to someone.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Dianne,

VA State law
requires our coverage to be equal to the amount in reserves plus 1/4 of the annual assessment.

What we did was do a spread sheet to track the flow of funds into and out of the Reserve account and then added the 1/4 of the amount of assessments with a 5% increase per year. This identified the maximum insurance amount needed and when it would be needed.

Our Association chose to purchase the higher coverage now rather than later for fear that it may be forgotten about by a future board. It's a little more money but also keeps us compliant with the law.

Tim

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