Quick answer: Fidelity cover helps protect body corporate money, including operating funds and reserves, where funds are stolen or misappropriated by a person who controls or manages scheme money.
What fidelity cover is for
- It is intended to protect scheme money against theft or fraud risks.
- It is especially relevant where trustees, employees, managing agents or other authorised people handle scheme funds.
- It should be reviewed when reserves or operating budgets increase.
Why trustees should review it
- Large reserves may mean the existing fidelity limit is no longer suitable.
- A managing agent’s own policy may not automatically be enough for the scheme.
- The policy should be checked for cancellation notice, noted interest and who is insured.
Information needed for review
- Latest administrative and reserve fund balances.
- Current budget and levy income.
- Details of who controls or can authorise payments.
- Managing agent fidelity insurance details where relied upon.
- Current policy schedule and wording.
Practical trustee questions
- What fidelity limit do we currently have?
- How was this limit calculated?
- Are reserve funds included in the calculation?
- Is the body corporate’s interest noted on any managing agent policy?
- Are there dual-authorisation controls for payments?
Internal controls also matter
- Insurance is not a substitute for good financial controls.
- Trustees should still use proper approvals, dual sign-off and regular financial reporting.
- Suspicious transactions should be escalated quickly.
This page is general information for trustees and managing agents. It is not legal advice and does not replace the policy wording, scheme rules or professional advice for a specific claim or renewal.
Frequently asked questions
Is fidelity cover the same as trustee indemnity?
No. Fidelity cover relates to theft or fraud involving scheme funds. Trustee indemnity relates more to trustee decision-making exposure.
Should fidelity cover be reviewed every year?
Yes. It should be checked at renewal and when the scheme’s funds or budget change materially.
Can LV Insurance help calculate the required amount?
We can help trustees gather the right documents and discuss the fidelity cover basis with the insurer.