Social Engineering Coverage: An Essential Addition to HOA Insurance Policies


Homeowners Associations (HOAs) are established to uphold community standards and ensure the smooth functioning of condominiums, subdivisions, and other planned communities. One of their primary responsibilities includes managing a comprehensive insurance program that covers potential risks and threats.  

However, the digital age has brought with it a unique, somewhat elusive class of risk—social engineering. This type of threat goes beyond traditional property damage or physical injuries and infiltrates into the realm of information security and cyber fraud. HOA boards should seriously consider incorporating social engineering policies into their association’s insurance policies to counteract these modern risks. 

Understanding Social Engineering  

Social engineering refers to manipulative tactics that fraudsters employ to trick individuals into divulging sensitive information, such as bank details or access to secure systems. They usually exploit human psychology and trust, rather than using technical hacking methods. Examples of social engineering attacks include phishing, baiting, pretexting, and quid pro quo, among others. 

The Relevance of Social Engineering Policies to HOAs  

Even though social engineering might seem more applicable to corporations and large businesses, HOAs are not immune to these attacks.  

For instance, scammers might impersonate an HOA board member and request payment from homeowners, thereby defrauding them of their money. Another example could be a fraudster tricking a board member into revealing the association’s bank details. 

The cost of such scams can be substantial, leading to significant financial losses and tarnishing the HOA’s reputation. Social engineering insurance can provide coverage against these losses, making it an essential part of an HOA’s risk management strategy. 

Benefits of Incorporating Social Engineering Policies 

  1. Financial Protection: Social engineering attacks can result in significant financial loss. A robust social engineering policy offers coverage against these losses, ensuring the financial health of the HOA. 
  1. Reputation Management: A successful social engineering attack could harm an HOA’s reputation. Ensuring you have measures in place to protect against these threats can preserve trust and confidence within the community. 
  1. Legal Protection: Depending on the jurisdiction, HOA board members may have a fiduciary duty to protect the association’s assets. A social engineering policy could help meet this obligation and potentially provide legal protection in the event of a lawsuit. 
  1. Encouraging Best Practices: When applying for a social engineering policy, insurance providers will typically expect the association to have preventative measures in place. This may encourage the HOA to adopt best practices such as regular training and awareness programs, therefore reducing the likelihood of successful attacks. 

Costs of Social Engineering Policies 

The cost of social engineering insurance varies depending on what kind of policy it includes. Social Engineering is not a separate policy. For HOAs it is typically located on their crime/fidelity coverage. It could also be attached to standalone cyber policy if that is how the HOA obtains cyber protection. Typically, cyber protection for an HOA is a part of the director & officers’ coverage and/or the crime/fidelity coverage.  

For an accurate estimate, HOAs should contact an insurance agent who specializes in such coverage. If social engineering is attached to the crime/fidelity coverage, then the cost will be rolled into that policy’s premium. For example, one carrier will write crime/fidelity coverage for $100,000 at $296 annually. The amount of crime coverage that a community should carry will vary and be based on the financial strength of the community. The best rule of thumb to figure out the amount of coverage needed is to use the following formula: 3 months of assessments + the amount in all reserve accounts.  

It’s also important to note that the costs of not having such a policy could be much higher, given the potential financial losses from social engineering fraud.  

For instance, according to the FBI’s Internet Crime Complaint Center, business email compromise (a common type of social engineering attack) led to over $1.8 billion in losses for victims in 2020.  

Therefore, considering the magnitude of potential losses, investing in social engineering insurance could be a wise choice for HOAs. 

Remember, these numbers are estimates and can significantly differ based on the circumstances. Always consult with a knowledgeable insurance professional to obtain an accurate quote. Not all carriers will write or include social engineering. Ask your agent if it is included or can be added. Management company’s crime coverage does not include individual HOAs. Each community should carry its own crime/fidelity coverage.  

In an era where fraudsters are becoming increasingly clever, it is crucial for HOAs to stay a step ahead. Incorporating social engineering policies into the HOA’s insurance framework not only offers financial protection but also fosters a culture of cyber-awareness within the association. 

When considering the costs of such a policy, keep in mind that this is an investment that provides a safety net against potential significant financial losses. Furthermore, these policies incentivize HOAs to implement preventative measures, such as regular training and awareness programs, effectively reducing the chances of a successful attack. 

With cyber threats becoming increasingly commonplace, social engineering insurance has emerged from being an optional extra to an essential component of risk management strategies. This integration reflects an understanding that safeguarding an association’s financial health and reputation extends beyond physical boundaries into the digital realm. It demonstrates a proactive approach in the face of evolving risks and signals to members that the HOA board is committed to ensuring the safety and security of the community in this digital age. 

Always consult with a knowledgeable insurance professional to understand the options available, tailor a policy that fits your HOA’s needs, and ensure the ongoing protection of your community.  

For more information or to request a quote, contact the experts at Community Policyholders at