Homeowners’ associations provide their members with many benefits, including protecting property values, a sense of community, maintenance of common areas, and a healthy living environment. When HOAs provide additional amenities for community members, the benefits can be even more significant.
But providing these benefits comes with a responsibility to association members, and if something goes wrong, leaders of an HOA could be held liable. That’s why HOA board members should consider purchasing an insurance policy that will protect them in the event of a lawsuit.
HOA on-site security
An often-overlooked benefit of living in an HOA community is the additional security measures that the association provides. If something goes wrong, like an unexpected accident or a breach of physical security, directors and officers of the association need to be prepared.
Board members, directors, and officers owe a fiduciary duty to their members. They must respond quickly to reported threats and should take proactive steps to reduce security risks.
Risk inspections and implementation
One way to do this is by hiring an independent security company to conduct an on-site risk inspection to identify any potential vulnerabilities. The security assessment should include an evaluation of the areas maintained by the homeowner’s association.
HOA Directors and officers can hire a professional to perform a security audit. The audit provides additional insight into potential security threats in areas that are managed by the homeowner’s association. The assessment will help the board identify security risks to ensure that the neighborhood is less vulnerable to security breaches.
When a potential security risk is identified, directors and leaders should implement a system that will reduce the risk. This may include increasing physical security protections, improved lighting, and better placement of perimeter cameras in and around the neighborhood.
Homeowners associations can hire a third-party security firm to provide additional protection. It may be tempting to allow association members to provide security, but it creates conflict. What if there is a major security breach on one member’s watch? Also, if a member has an affiliation with a hired security firm, it could result in allegations of bias.
Working with an adequately vetted third-party security firm will reduce the likelihood of potential conflict between association members who might take legal action against one another if a significant theft or other crime occurs in the neighborhood.
Cybersecurity concerns for homeowners association leaders
Cybercrimes are happening more each year. HOAs have possession of members’ personal information and must take care to protect that information from accidental disclosure or a data security breach. Board members should take steps to reduce their potential liability.
Association leadership should decide who will have access to sensitive data and should grant access to as few people as possible. Immediately revoke access privileges after a director leaves the association board.
Can an HOA be held liable for security shortcomings?
While HOAs are not solely responsible for security, they can be held liable for failing to take action that could have prevented loss or damage to an association member. Common examples include inadequate lighting in common areas, failing to maintain gates or inadequate cybersecurity measures that result in financial damage to an association member.
Board members should take care not to make statements that could be construed as promises about member safety, and they should encourage homeowners to be vigilant about their own safety. Consider an insurance policy covering physical security breaches and cyber-liability coverage.
Liability insurance protects HOAs from unexpected risks
When a situation arises that leads to property damage, injury, or financial loss to a homeowner’s association member, association directors and officers could be facing investigations, lawsuits, damage to their reputation, or even dissolution of the association. To protect themselves and the association, members of the board of directors should consider investing in an insurance policy that will cover them in the event of a claim.
Contact us today to learn more about coverage options for homeowners associations, including our Community Association Fidelity / Crime Insurance Program, our Community Associations Umbrella Program, and our Community Association Cyber Liability Insurance & Data Breach Response Services Program.