Insurance Coverage for Email Scams
June 8, 2023
According to the FBI, $43 billion in losses were sustained due to business email compromise between 2016 and 2021. Companies that have been defrauded by these schemes ought to look at their crime policies, says attorney Peter Selvin, of the Ervin Cohen & Jessup firm. Typically they cover losses arising from so-called social engineering, which should cover situations in which, for example, a genuine-looking email is sent to a company’s accounts payable department with instructions to pay money to a phony account. Computer fraud coverage may also pay. Some policies require “fraudulent entry of data into a computer system and change to data elements or program logic of a computer system.” Court cases have held that a third party’s entry into and manipulation of a company’s email system in order to generate a genuine-looking email will be covered under this formulation. Other possibilities are funds transfer and forgery coverage, but policy wording is always key. Given how widespread this kind of email fraud has become, companies ought to make sure that they have the right kind of insurance coverage to protect against these losses.
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