A false sense of security: Cyber policies include $250k fraud coverage

The vast majority of cyber insurance policies include $250,000 (or less) of funds transfer fraud (FTF) coverage. The exact coverage and terminology varies from carrier to carrier, but generally covers fraudulent invoices, gift card scams, electronic theft, and phishing attacks.

There is one major exception: At-Bay recently started offering $500,000 coverage for specific situations.

Why does this matter? Coalition Insurance, one of the largest cyber insurers in North America, releases an annual claims report. This is hands down the most transparent report in cyber insurance, providing detailed information about different impacts and aspects of cyber insurance claims. One key takeaway is regarding the severity of FTF. FTF claims on average are in excess of $250k ($265,700 specifically.)

Additionally, many cyber policies will exclude insider threats such as employee theft, as well as funds in custody/escrow (such as a law firm’s trust/IOLTA account), a critical coverage

So how can a small business protect themselves? A stand alone crime policy can not only provide additional coverage but in higher amounts. At Beltex we recommend $500k as a starting point, specifically for the reasons outlined above.

Crime policies are also surprisingly affordable, with $1mm coverage typically costing <$2500 for a small business with less than $10mm of annual revenues.