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Who has to buy fidelity insurance in a community scheme?


Hi, please could you tell me if the below insurance needs to be a policy bought by the homeowners association (HOA) and what sort of policy it should be?

Insure against the risk of loss in the case of any fraud or dishonesty in the handling of the scheme’s funds. This needs to be done as soon as possible, as it became necessary when the CSOSA was published in the Government Gazette, and is therefore immediately necessary.


It is for all complexes yes – sectional title and homeowners associations.

Below the full quote from the CSOS Act.

Fidelity Insurance

Regulation 15 (1) Subject to sub-regulation (5), every community scheme must insure against the risk of loss of money belonging to the community scheme or for which it is responsible, sustained as a result of any act fraud or dishonesty committed by any insurable person.

(2) For the purpose of sub-regulation (1) “insurable person” means any-

(a) Scheme executive;

(b) Employee or agent of a community scheme who has control over the money of a community scheme;

(c) Managing agent; or

(d) Contractor, employee or other person acting on behalf of or under the direction of a managing agent, who in the normal course of the community scheme’s affair has access to control over the monies of the community scheme.

(3) The minimum amount of the fidelity insurance cover required in terms of sub-regulation (1) is the total value of-

(a) The community scheme’s investments and reserves at the end of its last financial year;

(b) 25 percent of the community scheme’s operational budget for its current financial year.

(4) The insurance cover referred to in sub-regulation (1) must-

(a) Provide for payments of a loss by the insurer to the community scheme within a reasonable period after reasonably satisfactory proof of the loss has been furnished to the insurer; and

(b) Not require that criminal or civil proceedings be taken or completed against the insured person before payment is made under the insurance policy.

(5) A community scheme is not obliged to obtain fidelity cover for an insurable person if that person has delivered to the community schemes written proof that-

(a) The monies of the community scheme are covered by fidelity insurance that complies with the requirements of sub-regulations (3) and (4); and

(b) The insurer concerned has noted the community scheme’s interesting in the application of the proceeds of the policy and undertaken not to cancel or withdraw cover without giving the community scheme at least 30 days written notice.

You can contact any insurance company as they all know about it.

Got a burning question? Email david@hometimes.co.za and we’ll be sure to assist you

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Who is Karien Coetzee?

Karien Coetzee, national property management consultant at Trafalgar.

Karien Coetzee, national property management consultant at Trafalgar.

Karien Coetzee is the national property management consultant at property management company, Trafalgar. She holds qualifications in sectional title schemes management and homeowners association management.


David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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