Crime insurance is the perfect defense against crime funds fraud, which HOAs must carry for protection. Likewise, HOAs owe their membership a high duty of care in managing the association’s finances. HOAs must make a concerted effort to protect the association from unauthorized funds transfers to fulfill that duty. Fraudulent transfers could wipe out an association’s operating and reserve accounts.
Crime Insurance Benefits for the HOAs
Here are some of the more important ways that a crime insurance policy can safeguard HOAs against this type of fraud
It Can Address Online Theft
Not all data breaches and phishing attempts are the same. Often, they infiltrate firewalls with ransomware or appropriate third-party data. But there are other scenarios at play. Likewise, when cybercriminals set their sights on HOAs, finding a means to access banking portals and execute transfers is often the best and most straightforward way to reap a windfall.
Weak passwords could give criminals easy access to an association’s banking portal. Likewise, lax security on email accounts or well-targeted phishing attacks could bring about a fraudulent transfer. For example, suppose an association’s officers or directors receive an email from a known account belonging to someone within the association instructing them to initiate a transfer. In that case, detecting that the message did not originate from the person indicated may be impossible.
A crime insurance policy could provide HOAs with compensation for these kinds of scenarios. Therefore, procuring coverage for claims involving fraudulent transfers is an excellent way to mitigate the harm criminal actors could inflict on an HOA and its membership.
Insurance Coverage Fills Gaps in Banking and Legal Protections
In considering how HOAs can get coverage in case of funds transfer fraud, associations must understand the applications and limits of basic protections. Not all financial institutions have the same policies about refunding banking customers for fraudulent transfers or charges. Moreover, many of the most robust regulations in the Uniform Commercial Code, geared towards fraud prevention, apply only to credit charges and do not extend to electronic funds transfers.
Crime Insurance Plan Benefits May Cover Internal Theft
An HOA’s board members and property management staff can access and divert funds from the association’s accounts. In addition to stringent security controls to thwart dishonesty among an association’s principals or agents, crime insurance coverage is a vital form of protection. This contingency can spare HOAs from severe hardship due to internal theft.
Crime Insurance Providers Can Be a Resource for HOAs
The best insurance agents strive to offer substantive guidance to their clients about what they can do to mitigate their loss and liability exposure involving criminal, fraudulent activity. Applying a working knowledge about how fraudulent funds transfers occur, you can give your clients intelligent, practical insights about what they need to be vigilant about. Help them elect coverages with terms and limits that suit their unique needs and offer one-on-one support to understand crime insurance policy benefits and exclusions.
Help your clients identify their crime coverage needs discerningly. This vital resource can protect HOAs against loss and liability exposure.
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.