Can you believe this is the last Coverage Corner for 2018?  That year just blew right by, didn’t it?  Before we ring in 2019, we want to be certain you are all aware of the new law that goes into effect on January 1^st concerning insurance for common interest developments.

Section 5806 was added to the civil code and it reads:

Unless the governing documents require greater coverage amounts, the association shall maintain fidelity bond coverage for its directors, officers, and employees in an amount that is equal to or more than the combined amount of the reserves of the association and total assessments for three months. The association’s fidelity bond shall also include computer fraud and funds transfer fraud. If the association uses a managing agent or management company, the association’s fidelity bond coverage shall additionally include dishonest acts by that person or entity and its employees.

Best practices have always included having your fidelity coverage (also called crime or employee dishonesty) be in an amount equal to or greater than 3 months of assessments plus the amount in reserves.  Forward thinking insurance agents also take into account what will be transferred into reserves over the course of the year.  However, not all policies automatically include computer fraud and funds transfer fraud, nor do they include dishonest acts by the manager or management company.

Now is the time to check with the agent for your association to be certain this coverage is in place, or will be in place, by January 1^st.   Of course, if Berg Insurance Agency represents your community, there is no need to worry.  We are all over it.

Have a wonderful holiday and a joyous new year!

Terri Guest, CIRMS, CMCA 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!