How much crime or fidelity insurance must a California HOA carry?

What this assumes

• The association is a California common interest development association subject to the Davis-Stirling Act.

• You are asking what the statute requires as a minimum, not what any particular association should carry given its own exposure.

• The governing documents have been checked, since section 5806 yields to them where they require greater amounts [1].

What changes the answer

• The reserve balance, because it is one half of the formula and it moves every year [1].

• Three months of total assessments, which is the other half [1].

• Whether the governing documents require a greater amount, in which case they control [1].

• Whether a managing agent or management company is used at all, which turns on the extension requirement [1].

• Whether the computer fraud and funds transfer fraud protection is written at the same amount rather than at a sublimit [1].

Where it varies by state, form, carrier, or fact

• This is California. Fidelity requirements for community associations are state law and the formula is not general.

• The section sets a floor, not an assessment of the association's actual exposure. An association whose reserves are about to be spent on a large project may be carrying a compliant amount and an inadequate one at the same time.

• What a particular crime form covers, and how its sublimits are structured, is a question about that form rather than about the statute. The section tells you what must be in place, not how any insurer words it.

Next actions

1. Compute reserves plus three months of total assessments from the current figures and compare it to the amount actually carried [1].

2. Ask your broker in writing for the computer fraud and funds transfer fraud sublimits, and compare them to the crime amount rather than assuming they match [1].

3. If a management company is used, ask for the endorsement naming it and its employees and keep a copy with the policy [1].

4. Recompute the required amount at each renewal rather than renewing at the expiring figure, because the requirement moves with the reserves [1].

5. Check the governing documents for a higher requirement before treating the statutory amount as sufficient [1].

Source ledger

1 source. Every citation number above resolves to a record below. Nothing here sits behind an account.

1. [1]

   California Civil Code Section 5806 (required crime, employee dishonesty or fidelity bond coverage)(opens the original record on California Legislative Counsel (leginfo.legislature.ca.gov))

   California Legislative Counsel (leginfo.legislature.ca.gov)Primary lawPrimaryJurisdiction CAEffective January 1, 2022Last checked September 5, 2026Updates: Amended only by legislation. Last amended by Stats. 2021, Ch. 270, Sec. 3 (AB 1101), effective January 1, 2022.ID ca-civ-code-5806

   What this source supports (5)

   • Section 5806 requires that, unless the governing documents require greater coverage amounts, the association shall maintain crime insurance, employee dishonesty coverage, fidelity bond coverage, or their equivalent, for its directors, officers, and employees.
   • Section 5806 sets the required amount at an amount that is equal to or more than the combined amount of the reserves of the association and total assessments for three months.
   • Section 5806 requires that the coverage maintained by the association also include protection in an equal amount against computer fraud and funds transfer fraud.
   • Section 5806 provides that if the association uses a managing agent or management company, the association's crime insurance, employee dishonesty coverage, fidelity bond coverage, or their equivalent, shall additionally include coverage for, or otherwise be endorsed to provide coverage for, dishonest acts by that person or entity and its employees.
   • Section 5806 provides that self-insurance does not meet the requirements of the section.

   This is the one insurance requirement in the Davis-Stirling Act stated as a duty on the association rather than as a condition of somebody's liability protection. Three features are routinely missed: the amount floats with reserves and assessments rather than being a fixed figure, so it has to be revisited as reserves grow; computer fraud and funds transfer fraud must be covered in an equal amount, which a plain fidelity bond may not do; and the managing agent must be brought inside the coverage, which is where the loss most often originates.

   Active

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