When it comes to Fidelity Bonds (also called Crime or Employee Dishonesty policies), there is some confusion about when to notify the carrier of a potential claim. While it is specific to the policy, it is typically:
• 60 days from the “discovery of loss”
• Sworn proof of loss due within 120 days of “discovery of loss”

One policy states, “Discovery of loss occurs when you first become aware of facts which would cause a reasonable person to assume that a loss covered by this policy [i.e., theft] has been, or may be incurred even though the exact amount or the details of the loss may not then be known.”

So while the sworn proof of loss will ask you how much is stolen, etc., you don’t need to wait (nor should you) to have that information in order to file a claim. If you wait too long, the claim may be denied.

Conversely, just having a suspicion does not constitute a loss. You have to point to an actual loss of funds in order to file.

Another interesting point: often in employee dishonesty/fidelity/crime policies coverage for an “employee/board member” terminates when the association discovers they committed a dishonest act. So, if you discover they are stealing and realize you don’t have a lot of proof (enough to convict), don’t wait for them to steal more. The “more” that they steal would not be covered under the policy because you already knew they were stealing. Additionally, the dishonest act doesn’t necessarily have to involve the association. For example, if you discover that a board member stole something from Wal*Mart, you might lose coverage on that board member from that point as well.

Terri Guest is the Northern California Sales & Marketing Representative for Berg Insurance Agency and can be reached at Terri@berginsurance.com. Have an insurance question? Ask Terri and your question may be the subject of next month’s edition of Coverage Corner! If your question is picked, you will win a gift card!