If you are a trustee of a homeowner\u2019s association (HOA) or residential body corporate (RBC), you may be overlooking critical insurance gaps <\/p>\n\n\n\n
One common oversight is fidelity insurance, and the required cover needed.<\/p>\n\n\n\n
Since the 2016 amendments to the Sectional Titles Schemes Management Act 8 of 2011 (STSMA), fidelity insurance has become mandatory for RBCs. <\/p>\n\n\n\n
It\u2019s important to note that the decision to obtain fidelity insurance is taken by the scheme members at a general meeting, not by the trustees. <\/p>\n\n\n\n
Equally important to note is that standard policies might already include a specified amount of fidelity insurance cover. <\/p>\n\n\n\n
In some cases, this may still not be enough, so it\u2019s important to understand your RBC\u2019s or HOA\u2019s specific needs before settling on a cover amount.<\/p>\n\n\n\n
Fidelity insurance safeguards against financial losses due to fraudulent or dishonest acts, the loss of money of theft by trustees, managing agents, or anyone with access to the RBC\u2019s funds. <\/p>\n\n\n\n
It is important to note that if your RBC\u2019s funds are held and managed by a managing agent’s trust account, the managing agent should typically have their own cover, through the Estate Agents Affairs Board Fidelity Fund. <\/p>\n\n\n\n
However, if the funds are held in the RBC\u2019s own bank account and controlled by the trustees, separate fidelity insurance may be needed.<\/p>\n\n\n\n
To comply with the STSMA, the minimum amount of fidelity insurance coverage should equal:<\/p>\n\n\n\n
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