HOA Crime Policy: Name the Management Company as an Insured? (2026)

You usually shouldn't name the management company as an insured on your HOA crime policy. The association's fidelity/crime policy must cover the manager's people, but as employees added by an endorsement (a written amendment to the policy). The HOA stays the only named insured. That's the party the policy is issued to and the one that collects on a claim.

Boards often ask to add the firm as a named insured, while firms tend to hand over a certificate for their own crime policy instead. Each move leaves a gap that only shows up at claim time. The fix is one endorsement on the HOA's policy, backed by the firm's crime policy as a second layer.

Does our HOA crime policy cover the management company?

An HOA crime policy doesn't cover the management company by default. On the standard commercial crime forms from the Insurance Services Office (ISO), an employee is a natural person the named insured pays and directs. It expressly leaves out agents, brokers and independent contractors, so a management firm's bookkeeper sits outside the HOA's policy until an endorsement brings her in.

That reading comes from the Rough Notes analysis of ISO's 06 22 crime forms. For example, a bookkeeper on the management firm's payroll is the firm's employee, and the association neither pays nor directs her. Forms written for community associations often amend the definition, so check the definitions section and the endorsement schedule for that change. The declarations page (the summary sheet of limits and premium) won't show it.

The Fannie Mae management agent fidelity requirement

The Fannie Mae management agent fidelity requirement puts the duty on the association. The HOA's own fidelity/crime policy must cover the acts of any management agent. An agent that handles funds should also carry its own policy, though Fannie won't accept that policy in place of the association's coverage. Freddie Mac's Guide Section 4703.6 differs: a management firm can instead submit evidence of its own coverage, as long as it is insured to the same extent as the association.

Selling Guide B7-4-02 also requires the HOA to be the named insured and pay premiums as a common expense. Exemptions and required amounts belong to our guide on HOA fidelity bond requirements, and the dollar math lives in the Fannie Mae fidelity limit calculation.

One of Fannie's financial controls requires the management firm to keep separate records and accounts for each association. The firm also can't write reserve checks or move reserve funds. Meeting at least one of Fannie's controls lets the association carry a lower minimum limit. California's Civil Code 5806 goes further and requires the association's policy to cover dishonest acts by its managing agent and that firm's employees.

Should we name the management company as an insured?

Naming the firm usually weakens the HOA's protection. If you name the management company as an insured on the HOA crime policy, the exclusion for theft by "you" could reach the firm's owners. That exclusion covers partners and LLC members too. Scheduling the firm's people as employees covers the same theft and keeps the firm's owners outside that exclusion.

Why named-insured status backfires

It sounds backwards, since named insured feels like the strongest status a policy offers. A crime form, though, covers dishonesty by people you employ. It excludes dishonesty by the insured itself, and adding the firm makes the firm part of "you."

The joint insured condition causes a second problem. Knowledge held by any insured's designated officers or managers counts as knowledge of every insured. If the firm knew a staff member had a dishonest past, the policy treats the board as knowing it too. That can defeat coverage for the same person's later theft.

The endorsement to request

The better tool is ISO's CR 25 41, Include Designated Persons or Classes of Persons as Employees, or a carrier's own managing-agent wording. As the FC&S (Fire, Casualty & Surety) analysis explains, it adds anyone named or described in its schedule to the employee definition. Describe the class broadly, covering the firm's owners, officers and employees under its legal name.

How a manager's third-party fidelity coverage works

Third-party fidelity coverage is the part of a management company's crime policy that covers theft from its clients. On ISO's 06 22 forms it is called Employee Theft of Clients' Property. It pays for client money that a specifically identified employee steals, and the insurance benefits only the firm, so client associations have no rights under it.

Managers often call this a third-party fidelity bond, and it's worth carrying. A board relying on it should know four limits:

• It only responds when the firm can pin the loss on a specific employee.
• The firm files the claim and gets the money.
• A series of thefts by one employee is a single occurrence, so every association that person touched shares one limit.
• For an LLC or partnership, theft by members or partners is excluded as acts by "you."

Principals building their own program can start with our community management company insurance guide.

Which policy pays if a manager steals our funds?

The association's own policy pays first and most reliably, as long as it carries a managing-agent endorsement. The HOA gets the money. The firm's crime policy can pay too, under the rules compared below.

Who the loss payee should be on an HOA crime policy

A loss payee is the party the carrier makes the claim check out to. On the association's policy, the HOA should be the sole named insured and the only payee. On the firm's crime policy, ask whether the carrier will list the association as a joint loss payee for its funds.

ISO's CR 20 15 Joint Loss Payable endorsement does this. Payments then go jointly to the firm and the association.

Take a hypothetical bookkeeper at a management firm who diverts $140,000 from a 150-unit association's operating account over 11 months. The HOA's own policy carries a managing-agent endorsement, so the board files the claim. The carrier would pay the association $140,000 minus the deductible, the share the association absorbs itself.

Now suppose the board relied on the firm's policy. The same bookkeeper also took $1.2 million from six other associations, so seven clients share one occurrence and the firm's $1 million limit against $1.34 million in losses. The firm collects, and the association waits to learn its share.

Crime policy checklist for boards and managers

A sound setup makes the HOA the sole named insured and names the firm's people in a managing-agent endorsement. It also lists the HOA as joint loss payee on the firm's own crime policy. Boards and principals can confirm each item at renewal.

For the board

• Confirm the HOA is the sole named insured.
• Find the managing-agent or designated-persons endorsement, and check that it names the firm and describes its owners, officers and employees.
• Confirm computer fraud and funds transfer fraud coverage, then see our guide to HOA social engineering and wire fraud insurance.
• Collect the firm's crime certificate and ask to be its joint loss payee.
• Update the endorsement schedule the day a new management contract starts.

For the management company

• Carry employee theft of clients' property at a limit that reflects the funds you hold across all clients.
• Keep separate records and accounts for each association, and stay off the reserve signature cards.
• Ask each client for its endorsement page.

Coverwatch places HOA insurance programs and reads these endorsements as part of that work. Firms can see how we support managers on our page for HOA management companies.