Florida Condo Association Fidelity Bonds and Crime Coverage: What the Law Requires in 2026
By Ricardo Alonso, Founder, Atesa Risk Advisors · September 26, 2026
Key Takeaways
- Florida condominium associations must maintain insurance or a fidelity bond covering every person who controls or disburses association funds — including anyone authorized to sign checks, plus the president, secretary, and treasurer [1].
- The required amount scales with your balances: the coverage must equal the maximum funds in the custody of the association or its management agent at any one time [1].
- Since July 1, 2024, the Division of Florida Condominiums can monitor bonding compliance when a complaint is filed and can fine an association that fails to maintain the coverage [3].
- HOAs under Chapter 720 carry a parallel bonding duty, but their members can vote annually to waive it — a vote the condominium statute does not offer [2].
- In August 2026, the Miami-Dade Sheriff's Office charged six people with diverting at least $5.8 million from five condo and homeowners associations through a management company and falsified invoices [4].
- A statutory fidelity bond alone does not respond to forged checks, computer fraud, fraudulent wire instructions, or email impersonation scams — those need the separate insuring agreements of a commercial crime policy.
Florida law requires every condominium association to insure or bond all persons who control or disburse its funds, in an amount equal to the maximum funds in the custody of the association or its management agent at any one time [1]. Most associations satisfy the requirement today through employee-dishonesty coverage inside a commercial crime policy rather than an old-style surety bond. The boards that get it right do three things: they size the limit to the peak balance rather than a guess, they extend the coverage to the management company that actually moves the money, and they add the crime coverages the statute never mentions.
On August 27, 2026, the Miami-Dade Sheriff's Office announced six arrests in what it called Operation Sundown: at least $5.8 million allegedly diverted from five condominium and homeowners associations through a property-management company, affiliated vendors, and falsified invoices, according to reporting by CBS Miami and NBC 6 [4][5]. Investigators say part of it was insurance money meant to repair homes after Hurricane Irma [5].
None of that money left through a broken window. It left through the people and firms the boards had authorized to touch it. That is precisely the loss the fidelity-bonding requirement in the Condominium Act was written for — and it is the least-discussed line in most association insurance programs. Boards will spend a full meeting on the wind deductible and approve the crime limit without a single question.
The timing matters at budget season. For most Florida associations that runs October through December, the bond premium is a budget line, and the balances at risk are the largest they have ever been, because the post-Surfside reserve rules are forcing associations to accumulate real money.
What FS 718.111(11)(h) Actually Requires
The Condominium Act's insurance subsection carries a duty separate from the property and liability coverages: the association must maintain insurance or a fidelity bond for all persons who control or disburse funds of the association, and the policy or bond must cover the maximum funds that will be in the custody of the association or its management agent at any one time [1].
Two phrases do the work.
"Persons who control or disburse funds" reaches further than the treasurer. The statutory definition includes, without being limited to, anyone authorized to sign checks on behalf of the association, plus the president, secretary, and treasurer [1]. In practice that means every officer with signature authority, any board member on the bank mandate, and — through the custody language — the management firm that runs the operating account.
"Maximum funds … at any one time" sets the amount, and it is a moving target: the highest point the combined balances reach in a year. If the association's accounts peak at $600,000 the week the annual assessments post, that peak is the number the statute points at. The bond follows the money.
There is no dollar threshold below which a condominium association is exempt, and the duty applies whether the books are kept by a volunteer treasurer or a licensed management company.
Sizing the Requirement: Find Where the Balances Crest
Work out where your association's money actually crests. Four pots drive it:
| Pot of money | When it peaks | What to check |
|---|---|---|
| Operating account | Right after quarterly or annual assessments post | 12 months of bank statements, highest single-day balance |
| Reserves | Growing continuously under a funded reserve schedule | The current reserve study or SIRS funding plan, projected year-end balance |
| Special assessment proceeds | The collection window before the project spends it | The assessment resolution and collection calendar |
| Insurance claim proceeds | The weeks between the carrier's check and the contractor draws | Any open claim — this is the pot the Miami-Dade defendants allegedly raided [5] |
The reserve line deserves the board's attention this year. Structural Integrity Reserve Studies — the 30-year repair budgets Florida now requires on condominium buildings three stories and taller — are pushing associations to fund reserves they used to waive. If the schedule grows the pooled account by $200,000 a year, a bond that was adequate at the last renewal falls behind every month.
A special assessment does the same thing faster. An association that levies $1.5 million for a re-roof holds most of it, briefly, between collection and construction draws — and if the crime limit was set against a $300,000 operating peak, the coverage is short by more than a million dollars during exactly that window. Owners can estimate their own share of a levy with our special assessment calculator; boards should run the association-level number against the crime limit before the money starts arriving.
A Fidelity Bond and a Crime Policy Are Not the Same Purchase
The statute's language dates from the era when associations bought a true fidelity bond — a surety instrument covering named individuals. What carriers actually sell associations today is a commercial crime policy, and the distinction matters because the crime form is broader in some directions and narrower in others.
A typical association crime policy is a menu of separate insuring agreements ("standard forms; policies vary" applies to every row):
| Insuring agreement | What it pays for | Statutorily required? |
|---|---|---|
| Employee theft / dishonesty | Theft of money or property by a covered person | This is the piece that satisfies FS 718.111(11)(h) [1] |
| Forgery or alteration | Forged or altered checks and drafts drawn on the association's accounts | No — but common |
| Inside/outside premises: money and securities | Physical theft of money, including robbery of a courier | No |
| Computer fraud | A hacker transferring funds out through the association's systems | No |
| Funds transfer fraud | Fraudulent instructions to the bank that the association never issued | No |
| Social engineering fraud | An employee or manager voluntarily wiring funds because an email convincingly impersonated a vendor or board member | No — usually a sub-limited endorsement that must be requested |
The last three rows are where modern association losses actually happen, and none of them involve a dishonest insider — which means the bare statutory bond does nothing for them. A spoofed email that talks the manager into rerouting a contractor's payment is not employee theft; I walked through where that loss lands in the business email compromise post, and associations sit squarely in the target profile.
The Management Company Is the Biggest Variable in the Placement
Custody is the operative word: the statutory measure reaches funds held by the association or its management agent [1]. The standard crime form, meanwhile, defines "employee" — and the staff of an independent management company usually are not the association's employees under that definition.
That gap closes one of two ways, and a board should be able to say which one applies to it:
- The association's own crime policy is endorsed to treat the managing agent's personnel as employees for the employee-theft agreement, or
- The management company carries its own fidelity/crime coverage at adequate limits, with the association protected as a client — verified by certificate each renewal, not assumed.
Ask the questions the certificate does not answer: what limit, what deductible, and does the coverage pay for theft of client funds or only the manager's own? A firm holding operating accounts for forty associations behind a $100,000 employee-dishonesty limit is a structural problem for all forty boards.
The Miami-Dade case is the argument stated as a set of charges: investigators allege the scheme's organizer used the management company he owned to gain control over association finances, then moved money through affiliated vendors [4][5]. Whatever the outcome in court, the mechanism — custody first, diversion second — is the one the bonding statute and these endorsements exist to answer.
Enforcement Changed in 2024, and Boards Should Assume It Has Teeth
For decades the bonding requirement was, in practice, an honor-system rule. House Bill 1021 — the 2024 condominium accountability law, effective July 1, 2024 — changed the posture: upon receipt of a complaint, the Division of Florida Condominiums monitors compliance with the fidelity-bonding requirement and may issue fines and penalties against an association that fails to maintain it. That sentence now sits in FS 718.111(11)(h) itself, and the bonding duty is on the list of matters the division has jurisdiction to investigate [1][3][6]. The same law prohibited association debit cards and made soliciting or accepting a kickback a third-degree felony [1][3].
"Upon receipt of a complaint" means any unit owner in a dispute with the board can put bonding compliance in front of a state regulator with a form. An association that let the bond lapse, or never sized it to its actual peak, hands that owner a finding.
Condominiums and HOAs are not identical here:
| Condominium (Ch. 718) | HOA (Ch. 720) | |
|---|---|---|
| Core duty | Insure or bond all who control or disburse funds, at the maximum in custody at any one time [1] | Same operative language [2] |
| Who is named | Check signers, president, secretary, treasurer [1] | Check signers, president, secretary, treasurer [2] |
| Waiver | No annual waiver vote in the condominium statute | Members may waive annually by a majority of the voting interests present at a properly called meeting [2] |
| State monitoring | Division monitors on complaint; fines available [3] | No equivalent division fine mechanism in Ch. 720 |
If you sit on an HOA board that has been routinely waiving the bond to save a few hundred dollars, run the waiver decision against the Miami-Dade numbers, then decide whether the saving still looks like one.
What Unit Owners Can Ask For
The association's current insurance policies are official records an owner may inspect under FS 718.111(12) [1], and the crime or fidelity premium appears in the proposed budget each fall. Two questions at the budget meeting do most of the work: what is the crime limit, and when was it last compared to our peak balance? A board that has to look up whether the coverage exists is telling you something.
Boards bring me the master policy renewal every year, because that premium hurts. In the same programs, I keep finding crime limits that were set once — years ago, before the reserve rules, before the special assessment — and never touched. The building got reappraised; the money never did.
— Ricardo Alonso, Founder, Atesa Risk Advisors
How to Size the Bond: A Six-Step Review
| Step | What to do |
|---|---|
| 1. List every account | Operating, reserve, special-assessment, and any claim-proceeds escrow, at every bank, including accounts the manager controls. |
| 2. Find the true peak | Pull 12 months of statements and take the highest combined balance the accounts reached together. |
| 3. Add what is coming | Layer in the SIRS funding schedule, any planned special assessment, and expected insurance proceeds for open claims. |
| 4. Set the limit at the projected peak | That is the statutory measure — maximum funds in custody at any one time [1]. |
| 5. Close the manager gap | Endorse the association's policy for the managing agent, or verify the manager's own crime coverage by certificate and limits. |
| 6. Re-run it every budget season | Balances move; the bond follows the money. Make the comparison a standing October agenda item. |
FAQ for Florida Association Boards
Q: Is a fidelity bond required for a Florida condo association?
A: Yes. Section 718.111(11)(h) of the Condominium Act requires insurance or a fidelity bond covering all persons who control or disburse association funds, and since July 1, 2024 the state division can fine associations that fail to maintain it after a complaint [1][3].
Q: How much fidelity bond coverage does a Florida condo association need?
A: The statutory measure is the maximum funds that will be in the custody of the association or its management agent at any one time [1]. That means the peak combined balance across operating, reserve, special-assessment, and claim-proceeds accounts over the year.
Q: Who exactly has to be covered?
A: Everyone who controls or disburses funds, which the statute says includes anyone authorized to sign checks plus the president, secretary, and treasurer [1]. Coverage for the management company's personnel usually requires an endorsement or the manager's own verified crime policy.
Q: Can the association waive the fidelity bond?
A: Chapter 720 lets HOA members waive the requirement by an annual majority vote [2]. The condominium statute contains no such waiver vote, and the division can fine a condo association that fails to maintain the coverage [3].
Q: Does the fidelity bond cover theft by our management company?
A: Not automatically. Standard employee-theft forms define "employee," and an independent manager's staff typically fall outside that definition unless the policy is endorsed to include the managing agent — or the manager carries its own crime coverage that protects client funds. Verify which applies to you in writing.
Q: Does the bond cover wire fraud or email scams?
A: Generally no. Fraudulent wire instructions and email impersonation losses fall under computer fraud, funds transfer fraud, or social engineering insuring agreements — separate coverages on a crime policy, with social engineering usually a sub-limited endorsement you must request.
Q: Is a fidelity bond the same as D&O insurance?
A: No. The crime policy or bond pays for stolen money. Directors and officers coverage defends the board against claims that its decisions harmed the association or owners — including, often, the lawsuit that follows an embezzlement. A complete program carries both.
Related Reading
- Directors & Officers Insurance for Condo Associations: Essential Endorsements Every Board Needs — the liability companion to the crime policy, and what to demand in the form.
- Business Email Compromise Insurance in Florida — where the wire-fraud loss actually lands between cyber and crime coverage.
- SIRS Compliance or Non-Renewal? The 2026 Board Member's Guide to Structural Reserves — the reserve rules that are quietly growing the balances your bond has to cover.
How Atesa Risk Advisors Can Help
We build association insurance programs for Florida boards through our condo and HOA practice, and the crime piece is a standing part of that review. We pull the actual peak balances, map who touches the money including the manager, and place the employee-dishonesty limit the statute requires alongside the forgery, funds-transfer, and social-engineering coverages it never mentions.
If your association's crime limit predates your current reserve schedule, your last special assessment, or your current management contract, it is due for the comparison.
Ready to put your association's numbers against its coverage? Get your free quote and consultation at atesariskadvisors.com/get-quote or call (904) 900-5063.
Sources
[3] CS/CS/CS/HB 1021 (2024), Enrolled — The Florida Senate
External Resources for Association Boards:
- Division of Florida Condominiums, Timeshares, and Mobile Homes
- Florida Statutes, Chapter 718 (Condominiums)
Ricardo Alonso is the Founder of Atesa Risk Advisors, a Florida independent insurance agency. Licensed 2-20 General Lines Agent and 2-15 Health & Life Agent, with a Master of Liberal Arts in Finance from Harvard University. He reviews crime and fidelity placements as a standing part of every association program his agency quotes.
Educational disclaimer: This article is general educational information about insurance and is not insurance advice, a quote, or an offer of coverage. Rates, discounts, deadlines, and requirements change and vary by property; confirm current figures with primary sources and a licensed agent before relying on them. Coverage is subject to the terms of your policy. For a personalized review, contact Atesa Risk Advisors, an independent, RamseyTrusted brokerage licensed in Florida (2-20 General Lines).