Crime Insurance for Condo Associations
A condo association manages all funds and contracts on behalf of its membership, and individual board members and property management personnel are entrusted with a high degree of care. Unfortunately, it’s possible for memberships to blindsided by crimes committed by these individuals who are in a unique position to rob or defraud them. Because of this unavoidable risk, condominiums need to take measures to protect themselves from liability to its membership for criminal activity.
What Types of Criminal Activity Can Affect a Condominium?
Condo associations can be subject to many different forms of theft or embezzlement. As an example, a board member or management employee can misrepresent a unit owner’s membership dues or account balance in order to steal the difference. In addition, an association representative could misrepresent where funds are being spent by claiming that they are being allocated for improvements or maintenance contracts when in fact they are being appropriated for personal gain.
Do Professionally Managed Condominiums Really Need Crime Insurance?
Condo association crime insurance coverage is imperative for all condo associations, including those whose funds and contracts are primarily handled by a third party management company. A property management company’s insurance policy will likely not indemnify a condo association in the event of criminal wrongdoing. In effect, the association and its board of directors could be vicariously liable for the actions of the management company.