Jul 24

Crime Coverages Involving Computers

Cyber policies protect against specific threats, however, they are not comprehensive.  Coverage for other scenarios is typically written on the Crime Policy.  The following explains the difference between three types of coverage that may be offered through an endorsement.

Computer Fraud insures against theft of money, securities, or property by using a computer to transfer covered property from the insured’s premises or bank to another person or place. No coverage is provided for theft of information or for computer vandalism.

Example 1:  An unauthorized third party uses the bookkeeper’s stored credentials to initiate a transfer of funds

Example 2:  The bookkeeper’s computer is infected with a virus that captures their bank credentials and those credentials are used to initiate a transfer of funds.

Funds Transfer Fraud is similar to Computer Fraud except the fraudulent instructions come from some other means than a computer (phone call, text, fax) and they instruct the bank to transfer funds out of the businesses’ account.

Example 1:  The bank receives a fraudulent fax on company letterhead instructing them to transfer money from a businesses’ account.

Social Engineering Fraud is a confidence scheme that intentionally misleads an employee into sending money or diverting a payment based on fraudulent information that is provided to the employee in a written or verbal communication such as an email, fax, letter or even a phone call.

Example 1:  A bookkeeper receives an email that appears to come from the president of the company instructing them to transfer funds to a vendor for payment.  In reality the email address is forged and comes from a third party.

For more information on these coverages please contact your Morrow Insurance Agent.