Fidelity insurance limits are typically set by:

• A. Local city ordinances.
• B. Insurance broker preferences.
• C. Insurance company classifications
• D. Government Sponsored Enterprise (GSE) standards.

Answer: (D)

Fidelity insurance limits are guided by standards used by lenders when underwriting mortgages for associations. Government Sponsored Enterprises such as Fannie Mae and Freddie Mac publish minimum fidelity bond requirements that lenders rely on to determine whether an HOA, condo, or co-op has adequate coverage. Aligning the association’s fidelity limits with these GSE standards helps ensure mortgage financing remains available and protects both the association and the lender from losses due to employee dishonesty or theft. Local ordinances or broker preferences don’t establish these long‑term requirements, and insurance classifications don’t set the commonly referenced minimums; lenders use the GSE standards as the benchmark.