Affiliate Bonding Insurance
Per the International Association of Fire Fighters Constitution and By-Laws, the IAFF bears the cost of $5,000 of Labor Organization Bond (LOB) coverage for each affiliate. Coverage is provided for loss of funds or other property sustained through the failure of employees or officers, acting alone or in collusion with others, to discharge their duties in handling funds or other property of the local or affiliate as prescribed by law, or by the Constitution and By-Laws, or governing body of the IAFF.
A federal statute known as the Labor-Management Reporting and Disclosure Act (LMRDA) requires unions to maintain an LOB bond of at least 10% of its assets at all times. The LMRDA applies to locals who represent employees working for private employers (e.g., a private ambulance company) and those locals are typically – but not always – designated by the IAFF as industrial locals. If your affiliate is subject to the LMRDA, then you are required to purchase additional coverage to comply with the LMRDA’s requirement.
Please note that any IAFF state associations that have locals who represent members working for private employers must comply with the bonding requirements of the LMRDA.
IAFF affiliates representing only municipal, county and/or state employees are not required by federal law to maintain the LMRDA’s level of bonding.
While not all IAFF affiliates are covered by the LMRDA, the IAFF strongly encourages all affiliates to maintain, at a minimum, the LMRDA’s level of bonding as a good practice to ensure the financial security of the association. A similar statute applies to federal locals.
The cost of any additional bond amount above $5,000 must be paid by the local union, state or provincial association who requires or requests the bond amount be increased to meet the stated criteria. The supplementary premium is substantially less than the cost of identical coverage purchased individually in your local area.
A chart with the current rates can be found here and on the Schoenfeld Insurance website: https://www.schoenfeldins.com/iaff/
Please see explanation of this coverage:
Sample Bonding Formula
Liquid Assets: $30,000
Dues, Rental Income, etc.: $70,000
Funds Handled: $100,000
Minimum Bond Required
(or Recommended): $10,000 (10%)
While 10% is the minimum recommended limit, it is prudent for locals and affiliates to consider a bond limit equal to the total amount of funds handled. Limits up to $500,000 are available and may be purchased by each bond participant. Three-year premiums for increased bond limits are shown on the rate schedule page.
It is important to note this bond is not intended to cover political action committee (PAC) funds, union-financed pension or welfare plans or other separate trusteed fringe benefit plans such as vacation funds, apprenticeship and training funds or supplemental unemployment benefits. Plans like these can be subject to federal ERISA law and require a separate bond for compliance. ERISA bonds are available and can be placed individually for locals or affiliates to meet their requirements.
If you wish to change the amount of your coverage, email our agent directly with your requested limit. A new Certificate of Bond will be issued along with an invoice if you request additional coverage. Our broker agent, Karen Feger, can be reached at [email protected].