Cyber Liability Insurance: The Missing Piece in Community Association Risk Management
By Dillon Marksbury, Commercial Producer, Atlas Insurance
In today’s digital age, the topic of cyber security is becoming more important than ever before. Every year, the number of cyber-attacks increases, and the losses that come with it are significant. The Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3) reported 859,532 complaints of suspected internet crimes in its 2024 Internet Crime Report, with total losses exceeding $16 billion, a 33% increase from 2023 (Federal Bureau of Investigation, 2025).
Community associations managing a vast amount of sensitive data, from homeowner records and payment information to vendor contracts and internal communications. Yet, protection against cyber threats often remains an afterthought. Cyber liability insurance fills a critical gap in an association’s risk management strategy by offering financial protection from cyber incidents such as data breaches, hacking, and ransomware. This specialized coverage helps pay for notifying affected individuals, restoring compromised systems, and defending against legal claims or regulatory fines.
A common misconception among board members is that delegating data management to the property management company absolves the association of liability. In reality, the association owns its data. If a breach occurs, the association will likely be named in any resulting lawsuit. With many associations operating on lean budgets and volunteer leadership, the financial fallout from a cyber incident can be devastating. A single breach can lead to costly legal fees, system restoration expenses, and reputational damage that can take years to repair.
While cyber liability insurance is vital, proactive measures also play a major role in reducing risk. Associations should:
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Create strong/unique passwords
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Change passwords regularly
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Implement multi-factor authentication
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Update software and systems regularly
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Use strong firewalls
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Provide ongoing cybersecurity training for staff and board members
In a world where technology drives everyday operations, community associations can no longer afford to ignore the realities of cyber risk. Cyber liability insurance is not just an optional add-on, it’s an essential safeguard that helps protect finances, reputation, and member trust. By proactively addressing vulnerabilities, boards demonstrate responsible leadership and a commitment to the communities they serve. As threats continue to evolve, having the right coverage in place ensures your association is prepared to respond quickly and recover confidently.
