Minnesota law requires the treasurer of each fire relief association to be bonded for at least ten percent of the relief association’s special fund assets. However, the amount of the bond need not exceed $500,000.
Officers of relief associations affiliated with a city fire department where the city is bonded through the League of Minnesota Cities Insurance Trust (LMCIT) are automatically defined as covered employees on the city’s bond. These relief associations should obtain a copy of the city’s LMCIT bond to determine whether the amount of the bond is at least ten percent of the relief association’s special fund assets (with the required amount capped at $500,000).
If the city’s LMCIT bond meets the coverage requirement for the relief association’s officers, the relief association does not need to purchase a separate bond. If the city’s LMCIT bond amount is less than what’s required for the relief association, the relief association should either purchase a separate bond to bring coverage to the required amount, or work with the city to increase the amount of the LMCIT bond.
Because the statutory requirement specifies that the bond must be in an amount equal to at least ten percent of the assets of the relief association, the bond should not be subject to a deductible. For relief associations covered by a LMCIT bond, the LMCIT will reimburse the relief association in full in the event of a covered loss, subject to the bond coverage limit. The city will reimburse the LMCIT for any deductible that applies to the loss. This arrangement is specified in the LMCIT bond coverage.
Relief association treasurers who are bonded through an entity other than the LMCIT should review their fidelity bond and make changes as necessary to ensure that it is not subject to a deductible.
Published last in the June 2022 Pension Newsletter