Two words explain why community associations and HOAs need cyber insurance — motive and opportunity.
Motive — HOAs store valuable private data that may encourage cybercriminals:
- Full names and addresses
- Bank account numbers
- Social Security and driver’s license numbers
- Makes and models of cars
- Property values
Opportunity — HOA leaders may have limited financial resources, scant security expertise, and a tendency to underestimate cyber risks, paving the way for cyber intrusions.
A few years ago, HOAs and community associations could simply manage their cyber risks with virus-protection software. Today, they have to think about viruses, the threat of cybercriminals stealing their proprietary data, and all the sensitive resident information they store on their computers.
Cybercriminals fuel a thriving black market in private data which makes HOA residents prime targets of identity theft and financial fraud. With news headlines reporting one massive cyberbreach after another, anyone who controls sensitive private data needs to face reality. Ignoring the threat could expose you to negligence claims after a cyberattack.
These days, HOA leaders claiming, “We didn’t know any better,” might not find a sympathetic ear in the courtroom.
Third-party risks for HOAs
HOA leaders can’t be content to focus on their internal vulnerabilities. They also have to confront the risks of third parties like cleaning companies, landscapers, general contractors, and snowplow operators.
Any third parties vendors who can log into your systems represent a potential threat. Perhaps they know nothing more than the code to open your front gate, but that could be all the information criminals need.
As many organizations have painstakingly learned, you cannot control the behavior and business practices of outside vendors. You might require them to sign liability or indemnity agreements, which could help you out in court, but once lawyers get involved, things have already gone too far.
HOA officials also must stay attuned to the most insidious cybercrime tactic: social engineering. This ploy uses fake login screens and websites that look authentic but exist only to extract login information. No matter how strong your security system is, your staff and third-party vendors can be fooled into clicking a malicious link that reveals their login credentials.
Reducing cyberattack risks in HOAs
HOA leaders can reduce their vulnerabilities to cyberattacks by adhering to standard cyber hygiene practices. These include:
- Using strong passwords and changing them frequently.
- Creating separate logins for each online account.
- Updating anti-virus and firewall software.
- Limiting access to sensitive data.
- Adding two-factor authentication, which requires a login and a code sent to a cellphone.
- Training staff to stay abreast of the latest cyber threats, intrusion techniques, and social engineering schemes.
Following standard cyber hygiene practices cannot reduce your risks to zero, but it may mitigate the severity of damages if you end up in court.
Advantages of cyber insurance for HOAs
There’s no need to stand alone against the threat of cybercrimes. Adding cyber insurance to your HOA risk-management program can protect you against claims resulting from:
- Theft, loss, or unauthorized disclosure of private data or third-party corporate information.
- Unauthorized access, theft, or destruction of data.
- Denial of service attacks.
- Viruses transmitted from your computer systems that cause security breaches in other systems.
- Your HOA’s failure to:
- Comply with state breach-notice laws.
- Comply with your own privacy policies.
- Administer an identity theft prevention program required by local, state, or federal regulations.
Five million cyberattacks happen every day, according to the Breach Level Index published by the global digital-security firm Gemalto. If you have any weaknesses in your chain of cybersecurity, you can count on cybercriminals to exploit them.
McGowan Program Administrators has helped communities around the country reduce their exposures to cyber risks. Our experts can line you up with an HOA cyber insurance program that provides practical, economical coverage.
Ask us today about our Community Association Cyber Liability Insurance & Data Breach Response Services Program.
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