Cyber extortion is one of many online threats that HOAs have to contend with in their day-to-day activities. Comprehensive security protocols and cyber liability coverage can spare your HOA clients from significant hardship. Here are some important things to review about this formidable threat with your clients.
Extortion Against HOAs That Can Result in Cyber Liability and Losses
Are HOAs affected by cyber extortion? Some might mistakenly conclude that cyber extortionists are primarily interested in large corporations, utility providers, or hospitals. Cyber crimes against these types of entities tend to dominate news coverage about data breaches and ransomware attacks. Nevertheless, HOAs are an alluring target for cybercriminals.
When hackers extort an HOA, they can shut down operating systems and prevent associations from accessing data. They may also threaten to release individual homeowners’ personal or financial information within an HOA unless the association acquiesces to demands for payment. In some situations, paying these cybercriminals is the only option.
Examining the Scope of Potential Harm
Associations must consider the gravity of what could occur if a third party suddenly infiltrated their network and seized their programs or files. Data loss might make it impossible for an HOA to keep its ledgers accurate and identify which homeowners owe money for membership dues or assessments. Consequently, this could nullify an HOA’s ability to seek a legal remedy against homeowners with delinquent accounts. Furthermore, losing access to data could force an HOA out of compliance with legal requirements about financial recordkeeping codified in statutory law and an association’s governing documents.
Individuals and businesses are generally not liable for a third party’s criminal acts. But there are complications when criminal activity is highly foreseeable, and reasonable precautions could have prevented it. Failing to establish reasonable controls to limit access to an association’s finances could amount to negligence or a violation of fiduciary duty.
Key Security Protocols
Stringent cybersecurity protocols could go a long way toward keeping an association safe from cyber extortionists. Encrypting sensitive data, using strong passwords, and keeping software up to date are crucial to maintaining continuity in security. It may be advantageous for HOAs to work with professional IT service providers specializing in cybersecurity management.
Counsel From Cyber Liability Providers
Help your HOA clients know about the evolving scope of security risks online and emerging trends in cyber extortion coverage. Your counsel can raise awareness about this critical area of risk management. HOAs will welcome input about what they can do to deter unauthorized access, fraud, and extortion. Staying current with best practices can facilitate affordable cyber risk insurance coverage.
With benefits from a cyber liability policy, associations can offset their risk exposure significantly. Policy proceeds can compensate HOAs for direct losses resulting from extortion, facilitate investigations, and equip associations to defend claims from homeowners or third parties.
Agents need to work closely with HOA clients to enhance their understanding of their risk exposure and implement proactive strategies to combat crime. With the right resources and contingencies, associations can be ready to deal with cyber extortion threats online.
About Kevin Davis Insurance Services
For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (855)-790-7393 to speak with one of our representatives.