November 22 2022
Categories: P&C Solutions
Management Liability Series: Part 4 of 4 - Crime and Cyber Insurance
The mental stress and burden of discovering fraud or theft committed against a business can be emotionally overwhelming. Crime and theft risks are often more than most businesses realize and the cost is higher than most businesses can bear. While not all dishonest acts are carried out by employees, attempting to recover funds, and keeping your business running, can negatively impact cash flow and reputation. Crime coverage can help ease some of this burden by providing peace of mind, helping the business carry on with less disruption.
Crime and cyber crime policies typically provide several different types of coverage including:
- Computer Fraud: computer theft of money, securities, and other property
- Funds Transfer Fraud: transferring of funds from a financial institution based upon instructions fraudulently transmitted by a nonemployee
- Social Engineering: the art of manipulation in an online environment, encouraging people to divulge in good faith, sensitive, personal information such as account numbers, passwords, or banking information. Social engineering can also take the form of requesting the wire transfer of monies to what the victim believes is a financial institution or person with whom the victim has a business relationship, only to later learn that the monies have landed into the account of the thief
- Kidnap, Ransom, or Extortion: the surrender of property as a result of a threat to harm the named insured, an employee, or a relative or guest of the insured or insured's employees
- Employee Dishonesty: employee theft of money, securities, or property
- Forgery of Alteration: dishonesty in writing, signing, or altering checks, bank drafts, and other financial instruments
Businesses should be conscious of their crime and theft exposures, and how a policy can provide protection when needed. A Management Liability policy can be beneficial when these events occur, along with the other coverages we have outlined in our Management Liability Educational series. As a reminder, coverages typically provided by a Management Liability policy include:
- Directors & Officers (D&O): Covers directors and officers for claims made against them while serving on a board of directors and/or as an officer. Covers claims resulting from managerial decisions that have adverse financial consequences.
- Employment Practices Liability (EPL): Covers wrongful acts arising from the employment process, such as wrongful termination, discrimination, sexual harassment, retaliation, etc.
- Fiduciary Liability: The responsibility on trustees, employers, fiduciaries, professional administrators, and the plan itself with respect to errors & omissions (E&O) in the administration of employee benefit programs as imposed by ERISA.
- Commercial Crime and Cyber Crime Coverage: as outlined in this update.
No business is safe from becoming a victim of fraud or theft. Small businesses suffer the most due to limited financial resources that are necessary to recover from a loss. Protect your business against crime losses by purchasing a policy that will limit the negative financial impact and protect your bottom line.
Koppinger & Associates will help you identify and understand risks vital to your growth and success.
Contact our team for solutions.
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