The reserves are the target. Crime coverage is the backstop.
Fidelity and crime coverage for community associations: theft by a treasurer, bookkeeper or manager, forged checks, computer fraud, fraudulent wire instructions and social engineering, with the limit set to reserves plus three months of assessments and the management company's employees included.
By Sam Alishahi · CA Insurance License #4348151 · Reviewed October 2026 · How this page is researched
Who can touch the money, and how much is there
An association holds two pots of money: the operating account that pays the gardener and the water bill, and the reserve account saved for roofs and repaving. Both are controlled by a small number of people, a treasurer, a bookkeeper, a community manager, who sign checks, approve transfers and reconcile statements. Crime coverage, still called a fidelity bond in the statute, pays the association back when one of those people steals, forges a signature or redirects a payment, and when an outsider tricks them into wiring money to the wrong account.
California sets the floor. Since January 1, 2019, Civil Code section 5806 has required associations to carry crime insurance, employee dishonesty coverage, fidelity bond coverage or an equivalent for directors, officers and employees in an amount at least equal to the association's combined reserves plus total assessments for three months, with computer fraud and funds transfer fraud protection in the same amount. If the association uses a managing agent, the coverage must include or be endorsed to include dishonest acts by that company and its employees, and self-insurance does not count.
Lenders look at the same policy. Fannie Mae's Selling Guide requires fidelity and crime coverage on condo and co-op projects with more than twenty units, with the association as the named insured and the management agent covered, in an amount of at least three months of assessments when the association follows listed financial controls, or the maximum funds in custody when it does not. I set the limit to whichever rule is higher, and I check that social engineering, which many crime forms leave off unless added, is on the policy before the next wire goes out.
- Employee theftTreasurer, bookkeeper or volunteer taking association funds.
- Forgery and alterationForged checks and altered payment instructions.
- Computer and funds transfer fraudUnauthorized transfers out of operating or reserve accounts, required by Civil Code §5806.
- Managing agentDishonest acts by the management company and its employees, included or endorsed.
What underwriters will ask
Having these ready means I can go to market on the first call. The quote form asks for the same things, and anything you don’t know yet can wait.
- Balances: current reserve balance and the total assessments collected over three months.
- Signers: who can sign checks or approve transfers, and whether two signatures are required on reserves.
- Manager: management company name, whether it holds the accounts and its own crime policy.
- Controls: separate operating and reserve accounts, monthly statements to the board, annual review or audit.
- Units: number of separate interests and whether lenders require project approval.
- Current policy: declarations page, limit, deductible and whether social engineering is included.
HOA crime insurance, answered
How much crime coverage does a California association need?
Civil Code section 5806 requires at least the association's combined reserves plus three months of total assessments, with computer fraud and funds transfer fraud protection in an equal amount. The governing documents can require more, and I recommend rechecking the figure every renewal because reserves grow.
Does the policy cover the management company?
It must. Section 5806 says the coverage shall include, or be endorsed to include, dishonest acts by the managing agent and its employees. A policy held by the manager alone does not satisfy the statute, and Fannie Mae likewise does not accept a management agent's own policy as a substitute for the association's.
What is social engineering coverage and do we need it?
It pays when an authorized person is deceived into sending money, for example by a convincing email that changes a vendor's bank details. Many crime forms treat that as a voluntary transfer and exclude it unless a social engineering endorsement is added, usually with its own sublimit, so I ask for it on every association quote.
What do mortgage lenders require?
Fannie Mae's Selling Guide, topic B7-4-02, requires fidelity and crime insurance on condo and co-op projects with more than twenty units, naming the association as insured, covering the management agent, and set to at least three months of assessments when the association keeps separate accounts, bank statements to the board and two-signature reserve checks, or the maximum funds in custody otherwise. Where state law requires more, the guide accepts the state figure.
Is a fidelity bond the same as crime insurance?
The statute uses both terms, and in practice associations buy a crime policy that covers employee dishonesty, forgery, computer fraud and funds transfer fraud. A surety-style bond covers less, so I quote the insurance form and confirm each required peril is listed.
Does the budget report have to mention it?
Yes. The annual budget report under the Davis-Stirling Act summarizes the association's fidelity coverage along with its property and liability policies, so owners can see the limit, deductible and insurer. I give boards the summary wording with the policy.
Do you offer HOA crime insurance outside California?
Yes. Clients across the country send the same quote form. Sam Alishahi is licensed in 49 states and Washington, DC and places policies there directly. In Florida, where Sam's licenses are still being issued, a partner agency in your state helps in the meantime. The shopping across carriers works the same way. Rules, minimums and markets differ by state — see insurance requirements by state.
Send the balances. I'll size the limit.
Email me the reserve balance, the quarterly assessment total and the management company's name. I'll quote crime coverage that meets section 5806 and the lender guide, with the manager and social engineering included.
Alishahi Insurance · Saman Alishahi, independent insurance broker, California License #4348151. General information, not a quote or a promise of coverage; coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.
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(877) 711-4545Answered 24/7 · CA License #4348151
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