Condo Media - November 2011 - 33

actions were unlawful and would result in the taking of an insured’s property. Poor or careless business decisions made by a board of directors that result in a loss of an association’s funds, while not covered by fidelity insurance, may be considered a “wrongful act” under a D&O insurance policy. Coverage for the claim, however, will depend on the definition of a “loss” and overcoming the standard insured vs. insured exclusion.

Coverage for Dishonest Acts of Managers
Many community associations delegate the day-to-day operations to a management company. Depending on the contract, the management company and its employees are given access to an association’s funds. While most management contracts do not give managers access to an association’s reserve funds, recent headlines report thefts of six- and seven-figure amounts from association’s operating

accounts that are committed over a period of years. Since a management company and its employees are not employees of an association, and since most employee dishonesty policies exclude the dishonest acts of an agent or independent contractor of an association, standard employee dishonesty policies will not reimburse an association for such thefts. The Federal Housing Administration (FHA) issued its Condominium Project Approval Guide on June 30, 2011. Section 2.1.9 dictates the required fidelity insurance coverage of associations and management companies as follows: Fidelity Bond/Fidelity Insurance – may also be known as “Employee Dishonesty” or “Crime Policy” (project approval): For all new and established projects with more than 20 units, the homeowners

association is required to obtain and maintain this insurance; • The homeowners association must maintain this insurance for all officers, directors, and employees of the association and all other persons handling or responsible for funds administered by the association; • The coverage must be no less than a sum equal to three months aggregate assessments on all units plus reserve funds unless state law mandates a maximum dollar amount of required coverage. If the homeowners association engages the services of a management company, the homeowners association must require the management company to maintain this insurance coverage for its officers, employees and agents handling or responsible for funds of, or administered on behalf of, the owners

We m We provide more condominium re-roofing than any other company in Greater Boston. re-ro oofing com mpany Boston n.

Asphalt Shingles Rubber Roofing Repairs & Re-roofing Metal Roofing Gutters & Downspouts

Our Company Pledge: We will call you back on the same day. Manufacturer trained installers ensure correct installations. First class professionalism and clean-up. Licensed and insured in MA & CT.

We work closely with Property Managers and Engineers to identify the most cost-effective roofing solution for your association.
For the past twenty years, our mission has been to provide the best installed roofing systems and superior service for the greater Boston area. We are certified by all major roofing manufacturers. We regard excellent customer relations as an essential part of our full-service roofing company. Expect our production crews to be reliable, and our twenty-four hour emergency repair crews to be proficient in troubleshooting hard-to-find leaks. — Shawn Bryan, President.

Member since Member since 1998

617 244-990 244 617-244-9901 617-244 990 617-244-9901 www.newtonroofing.com www.new wtonroofing.com

LIC# 111908 MA L

CONDO MEDIA • NOVEMBER 2011

http://www.newtonroofing.com http://www.newtonroofing.com

Condo Media - November 2011

Table of Contents for the Digital Edition of Condo Media - November 2011