On the Money: Have You Heard of Cyber Insurance?

New York City

Associations have access to all kinds of information on their current, former, and potential residents. Consider what goes into an application for share purchase in a co-op: Social Security numbers, bank statements, dates of birth, etc. All this information is entrusted to the care of an organization and its property manager. 

And who would love to get their hands on this? Thieves — the kind who create false identities and bogus credit accounts.

What can co-op and condo boards do about this problem? Be careful of the information collected, of course. And then insure against its theft.

While cyber insurance has been around since 2001, there are many new programs out there now, according to Barbara Strauss, executive vice president at York International, an insurance broker.

She points to one of them that has just become available in the last year. Called Cyber$ential, it is, she says, relatively inexpensive and offers good coverage for small and midsize buildings, dealing with the individual co-op's or condo's liability. It has been specifically designed to protect against the financial consequences of a cyber/privacy breach resulting in financial liability.

A choice of four options offers limits from $100,000 to $1,000,000, ranging in premium from $350 to $1,000. The coverage includes "Acts of" and "Breaches to" subcontractors; physical theft of personally identifiable information; and not only acts by "unauthorized users" (a typical insurance policy) but also acts by "rogue" employees.

You're eligible for the program if you are a co-op, condo, or property manager and

  • Your annual gross revenues are less than $5,000,000.
  • You have had no prior losses within the past five years.
  • You are not facing any suits or threats of suit for website content, e-commerce activity, or network security in the last five years.
  • You have no knowledge of any act, error, or omission on your part that may be reasonably expected to give rise to any e-commerce claims against you insured.

Often — though not always — purchased by the manager, policies like Cyber$ential deal with federal and state regulations requiring the notification of individuals if their information was potentially compromised in a breach. Without insurance, the cost of monitoring and notifying could be as high as $50,000 for a 225-unit co-op.

Co-ops and condos can also be liable for the actual financial loss and costs that the residents suffer following a breach. Forensics — the investigation of the breach — can be as much as $1,500 an hour. The co-op or condo may also face federal and state fines for failing to safeguard personal identity information. Restoration of the property's database is an additional expense.

"This is an underserved industry right now," says Steve Bedosky, a vice president at York who specializes in cyber insurance. "A lot of people just do not understand their exposure. Everyone thinks that it's not going to happen to me."

 

For more, see our Site Map or join our Archive >>

Subscribe

join now

Got elected? Are you on your co-op/condo board?

Then don’t miss a beat! Stories you can use to make your building better, keep it out of trouble, save money, enhance market value, and make your board life a whole lot easier!