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R&R Insurance Blog

How Insurance Can Protect Corporate Bank Accounts

Posted by the knowledge brokers

iStock_66176239_XXXLARGE.jpgIt wasn’t long ago that once we deposited money received for goods and services into our bank account, we were able to sleep comfortably knowing that our money was safe.  After all, vaults and the security surrounding them were so secure that breaking into was left to the imagination of Hollywood producers.  But with the dawn of the technology age has also come the era of cyber heists with unknown and unseen actors hacking into computers and fooling people into parting with their hard earned cash.

There a number of ways that a business can insure for these risks.  But, as is common in the world of insurance, coverage is dependent on a number of factors including how the crime was perpetrated. 

Adding to the confusion is the term “cyber” which leads to misunderstanding that all crime committed with a computer is covered in the same way.  It is not. 

Crime policies have been available in the market for years.  Most insureds are more familiar with the term Employee Dishonesty and ERISA bond which are only part of what can be covered by a Crime policy.  I want to address two additional insuring agreements that are available on Crime policy and the new Social Engineering Fraud agreement that is available from some carriers. 

The first of these is Computer Fraud.  This part of the crime policy is intended to coverage a loss when the instruction received by the financial institution to transfer money from one account into another or to a location outside of the premises,  is fraudulent.  Typically the customer would have no knowledge that money has been transferred from their account until they review their account or statement.

The next is Electronic Funds Transfer.  As is the case with the Computer fraud , this agreement requires that an electronic , telegraphic, cable, teletype or telephone instruction be fraudulently sent to the financial institution directing the transfer of money from the account. 

The important part of both of these definitions, for purposes of this article is the instruction is fraudulent.

That is different from Social Engineering Fraud.  In this scheme, the account holder (financial institution customer) is tricked into believing that the transaction that they, the customer,  are sending to the financial institution to transfer money is legitimate.  In other words, the instruction being sent to the financial institution is correct.  This type of fraud is increasingly common.  Bad actors are drafting emails to trick people into believing that they are being instructed to transfer money from their account usually by someone in authority at their company.   

In considering this insurance it is important to understand how these terms are defined in the policy rather than assume that all things computer related and cyber mean the same in every instance. 

R&R Insurance Cyber Liability eBook

Topics: bank fraud, Cyber Liability

Questions to Ask Your Bank Regarding Fraud

Posted by the knowledge brokers

MoneyWhen it comes to our banking relationships many businesses and individuals are lulled into believing that their funds are totally secure. While all banks accounts are insured by the FDIC, many do not realize that the FDIC insurance only covers bank failures and does not apply in the case of theft by fraud. Since fraud, in particular social engineering fraud, is costing businesses billions of dollars, it is vital to understand what your bank’s position is regarding the safety of your money.

Is there any protection that your bank is providing in the event of fraud?

Here are some questions that business owners should be asking their bankers:

  • Is the bank insuring our funds in the event that our user name/password is stolen and used to transfer money out of our account?
  • Does the bank offer any protection in the event that our employee is tricked into transferring money out of our account?
  • If our corporate credit/debit card is lost or stolen is there a limit on any amounts charged that we are responsible for?
  • What are the bank’s responsibilities in the event that a bank employee is tricked into believing that they are talking to our authorized representative and a funds transfer is allowed to be completed?
  • How secure are our funds in the event that the bank itself is hacked into?

In addition be sure to address all types of accounts that you may have, checking, savings, money market, retirement accounts, trusts etc. It is better to have this conversation with your bank prior to money disappearing from your account.

R&R Insurance Cyber Liability eBook

Topics: Cyber Liability, bank fraud, Business Insurance