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Covering A Community Association’s Cyber Exposure

10/01/2022 11:40 AM | Bridget Sebern (Administrator)

By Nicole Hernandez, PCAM, CIC, CCIG

Almost every day we hear a story or read an article about a cyber-attacks.  With increasing cyber events and associated losses, it’s reasonable for community associations to be concerned about potential exposure and liability and are often left wondering “how do we protect ourselves?”

Many communities work with management companies and third-party contractors to handle the management of the Association’s records. (Keep in mind when we are talking about data and records, this includes both digital formats as well as paper files.) However, the exposure is often identified too late when there is an event that causes a loss.  Although a management company is contracted to manage the association’s records, the records are still the custodial responsibility of the association and in the event of a loss, the HOA could be responsible for providing data breach response.

Cyber liability policies include coverage for what can be the most expensive part of a cyber event; navigating the response to the event for the individuals affected.  The State of Colorado requires that individuals affected by such an event be notified and offered credit monitoring services. As you can imagine, when we are talking about larger communities that contain hundreds or even thousands of units, this can be quite an expense for the association’s operating budget to take on.

Coverage for data breach response offered by a cyber liability policy often includes coverage not only for the notification and credit monitoring, but also for legal support, computer services, public relations and notification management expenses and associated costs.

In addition to the data-breach response services covered under a cyber liability policy, liability coverage is also part of the policy.  The liability coverage part of the policy is meant to address any regulatory response, defense, penalties, expenses, and costs associated with the event.

Fortunately, there are a number of products being developed and available to cover an HOA’s cyber exposure.  Many of the top HOA program carriers have developed a product designed to protect an HOA from this exposure and offer varying limits of coverage. Minimum coverage limits offered are typically $25,000 to $50,000.

Recent market reports have reflected an increase of carriers offering cyber liability coverage which is increasing the limits of coverage available in the market significantly. Although cyber liability & data breach response premiums are currently inflated, the additional availability should eventually help steady premium rates.  In a community association, the cyber liability premium will be scaled based on the number of homes in the community.  

A well-rounded risk management program not only includes proper coverage for associated losses the community may face, but also proper measures to protect against such loss.  Ensuring education, policies & procedures and resources for Board members and management company employees is a key foundation for any cyber risk program.  


With over twenty years of Community Association experience, Nicole understands the structure of Community Association Management and the challenges Managers and Boards face daily. Nicole combines that background with a passion for education and her community.  She utilizes this foundation to provide risk management and insurance services to HOAs across Colorado along with CCIG’s specialized HOA team.

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