Cyber Crime Coverage is an essential component of a comprehensive cyber insurance policy, designed to protect businesses from financial loss resulting from criminal activities carried out through digital means. This coverage specifically addresses risks like electronic funds transfer (EFT) fraud, phishing attacks, and social engineering schemes—where cybercriminals deceive employees into transferring money or sensitive information.
EFT fraud occurs when a hacker gains unauthorized access to a company’s systems or banking information and initiates fraudulent transfers. Phishing attacks involve fraudulent emails or messages that trick recipients into revealing login credentials, financial information, or approving false payments. Social engineering—often a combination of psychological manipulation and technical tactics—can lead employees to mistakenly send money or disclose critical data to impersonators posing as executives, vendors, or clients.
Cyber Crime Coverage helps recover stolen funds and covers the cost of investigating the attack, legal assistance, and potential business interruption. It may also cover losses due to forgery, wire transfer fraud, and impersonation scams that bypass internal controls.
Since these crimes are increasingly sophisticated and targeted, Cyber Crime Coverage is a critical safeguard for organizations of all sizes. It provides vital financial protection and peace of mind in the face of evolving digital threats.
Example: Wholesale Distributor Electronic Funds Transfer (EFT) Fraud
Scenario:
A regional wholesale distributor experiences a cybersecurity breach when a hacker gains unauthorized access to an employee’s email account. The attacker monitors email communications for several days, then sends a carefully timed and convincing message to the finance department requesting payment for an outstanding invoice. The email appears to come from the company’s CFO and includes accurate invoice details and instructions to wire $250,000 to a new bank account.
Believing the request is legitimate, the finance team processes the transfer. Days later, during a routine financial review, the CFO notices the payment and raises concerns. A full investigation reveals that the email was fraudulent and the funds have been transferred to a foreign bank account controlled by cybercriminals.
Response and Coverage:
The company files a claim under its cyber insurance policy, which includes Electronic Funds Transfer (EFT) Fraud coverage. The policy reimburses the $250,000 loss, and also covers $15,000 in additional expenses related to the forensic investigation, legal consultation, and system security improvements.
Outcome:
With the support of EFT Fraud coverage, the business is able to recover from the financial impact of the attack and strengthen its internal payment procedures to reduce the risk of future incidents.ucing future exposure to intellectual property disputes.
