Crime Insurance and Preventing Criminal Activity in the HOA

Your HOA clients have to be vigilant about protecting themselves against criminal activity. A strong preventative strategy to combat crime proactively and comprehensive crime insurance should both figure prominently in their risk management plans. Here are some key considerations to review with your clients about what they can do to safeguard their associations.

Crime Insurance as an Essential Contingency To Redress Internal Theft 

The most significant crime risks against an HOA association may originate from within its own ranks. Associations entrust the officers and directors who they elect to represent their interests to adhere to a fiduciary level of care.

Unfortunately, access to the association’s finances, bookkeeping programs, and assets can create opportunities for financial dishonesty. For this reason, crime insurance coverage must equip associations to deal with incidences of internal theft.

Understanding the Gravity of Internal Threats 

Many HOA board members may think that their associations are safer from internal threats than they really are. The misconception that HOA crime prevention is not a substantive priority can stem from the trust and reliance that board members have in one another. It is simply hard for them to picture that their fellow officers and directors, who are also their friends and neighbors, would engage in any financial dishonesty.

In claims against HOA crime insurance policies involving internal theft, it is common for criminal wrongdoing to come as a complete shock to claimants. Moreover, board members might be able to take advantage of their position to conceal misuse of the association’s resources, theft, or embezzlement.

Insights on Best Practices From Crime Insurance Providers

Be ready to offer your clients guidance about what they can do to strengthen their risk management programs. Meaningful, proactive support can significantly reduce an HOA’s vulnerability to crime perpetrated by board members and third parties. With your support, clients will be better able to avoid claims against their HOA crime insurance coverage.

Make it a point to review key security measures to deter and detect financial dishonesty within an HOA association:

  • Strong financial oversight that includes third-party audits;
  • Restricting user permissions for accounting programs to alter information;
  • Policies expressly prohibiting conflicts of interest; and
  • Requiring multiple signatories for expenditures over specific amounts.

While legal doctrines pertaining to liability generally do not attribute culpability for a third party’s wrongdoing, this is not necessarily true of situations in which a party failed to take reasonable measures to prevent foreseeable crime. In particular, failing to remedy problems with the functionality of a security measure could impart liability. For example, leaving surveillance or access control systems in non-working order might give rise to a valid claim against an HOA.

Touch base with your clients about the importance of maintaining continuity in security. Also, discuss how they may utilize targeted policies to thwart criminal activity:

  • Screening practices for contractors who the HOA hires;
  • Requirements that contractors who residents hire provide proof of professional licensing and insurance coverage; and
  • Securing ingress to a community with surveillance systems and gated entry points.

Ultimately, work closely with clients to identify and address their risk exposure. Taking the proper precautions and establishing adequate contingencies with insurance coverage can help to prevent serious harm.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (855)-790-7393 to speak with one of our representatives.