Condo Media - June 2019 - 16

Asked & Answered

Cyber Details

Insurance Claims and Safety Concerns

Our board has read a number of
articles about cyber security risks for
condominium associations. What are
the most common claims, what types
of insurance, and in what amounts, do
associations need to protect themselves?

There haven't been many cyber-claims against community associations to date, and that's good news,
Joel Meskin, vice president in charge of community
association products for McGowan & Company, Inc.,
reports. The bad news, he says: "This is the calm
before the storm." Claims are coming, he predicts,
and most boards don't understand the risks and
potential liability they face.
CYBER RISKS
Cyber risks take many forms. They include,
among others:
■ Cyber-theft: Third parties hack into and
drain association bank accounts.
■ Social engineering: A cyber-thief tricks
a board member or manager into wiring
association funds to the thief's account.
■ Data breach: Personal identifying information
the association collects and/or stores is lost
or stolen.
Community associations have potential exposure
to all of these risks, Meskin says, but the greatest
current risk, he suggests, is a data breach. A breach
occurs, he says, not only if someone hacks into the
association's computers, but also if a board member
loses a laptop containing association files, or leaves
that laptop unprotected on a desk.
Associations will face litigation costs and possibly
damage awards resulting from data breach claims.
But the costs don't end there, Meskin notes. Most

16

CONDOMEDIA June 2019

states have enacted data breach statutes, and the
loss of even a small amount of personal information-name and phone number, email address or
social security number-will trigger the extensive
and expensive consumer protections these laws
mandate. These protections typically include notifying individuals whose information has been compromised, providing credit monitoring services for
some period, and implementing remedial measures
(data protection controls, procedures and systems)
as well as an array of fines and penalties.
These remedies are expensive. Notification costs
for current residents might not be excessive, Meskin
agrees. But unless an association regularly purges its
files, the lost data may include information on past
residents going back years or decades, in which case,
"you're talking about a geometric increase in notification costs and credit reporting expenses."
INSURANCE COVERAGE
Associations may have some coverage for cyber
claims in existing policies, Meskin notes, but the



Condo Media - June 2019

Table of Contents for the Digital Edition of Condo Media - June 2019

Contents
Condo Media - June 2019 - Cover1
Condo Media - June 2019 - Cover2
Condo Media - June 2019 - Contents
Condo Media - June 2019 - 2
Condo Media - June 2019 - 3
Condo Media - June 2019 - 4
Condo Media - June 2019 - 5
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Condo Media - June 2019 - Cover3
Condo Media - June 2019 - Cover4
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