Published: December 1, 2015

Are you a property manager in Colorado and having to be compliant with CAM?  You are not alone.  The state of Colorado announced that they will be requiring an examination as well as proof of E and O insurance.  What many mangers are not catching is that DORA is also requiring a fidelity bond to be in place to protect the HOA from any theft of funds. Aritcle D-10 from the Colorado Secretary of State notes:

  • Every Active Licensed CAM company and licensed sole proprietorship must have in effect a crime fidelity insurance policy covering the dishonest acts of all employees in the CAM company or sole proprietorship.
  • CAM companies and licensed sole proprietorships must obtain crime fidelity coverage from an insurance carrier or be named as an additional insured on the common interest communities fidelity insurance policy, subject to the following terms and conditions
    • The insurance carrier is licensed and authorized by the Colorado Division of Insurance to write policies of crime fidelity insurance in this state and is in conformance with all Colorado statutes.
    • The insurance carrier maintains A rating
  • The policy, at a minimum must comply with all relevant conditions set forth in this Rule and coverage must provide at a minimum the following:
    • a) The contract and policy are in conformance with this Rule D-10 and all relevant Colorado statutory requirements.b) Coverage is exclusive to covering acts contemplated under the current Act and the Director rules. c) Coverage for each common interest community managed, must not be less in aggregate than two months of current assessments plus reserves, as calculated from the current budget of the common interest community, or such higher amount as the common interest community may require in its bylaws or management contract with the CAM company or licensed sole proprietorship. This coverage includes, but is not limited to, any CAM company, sole proprietorship, or designated manager that controls or disburses funds of the common interest community, or that is authorized to sign checks on behalf of the common interest community. Costs of investigations must be outside of these limits and are subject to their own per claim and aggregate limits. d) Payment of claims by the provider will be on a first dollar basis and the provider will look to the insured for payment of any deductible. e) Coverage contains a deductible no greater than one (1) percentage point of the total face amount of the policy. f) That the provider of the policy or its designated agent has executed an affidavit in a form or manner specified by the Director attesting that the policy is in force and, at a minimum, complies with all relevant conditions set forth in these Director rules.

Here is the bottom line with Fidelity bond coverage.  If you are a property manager, you can be covered for third party liability or additional insured (not the right wording here) under the active HOA crime policy.  Just make sure that property managers are included in coverage.  Or, the best practice would be to obrtain your own Third party Fidelity Crime coverage.  Premiums are less then $1k per year.  This is a better way to insure yourself. Give me a call today for more information. Rick Cline All Access Insurance 303-932-1700