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Asset Protection with Insurance

Working with any client has its challenges, especially when it comes to suggesting additional insurance coverage.  Such was the case when after several conversations about cyber liability, my client agreed to obtain a quote.  The hesitancy was based on the PERCEIVED TIME it would take to complete the application.

Time Well Spent completing the Cyber Liability application

After sending the application to my client, it was returned within a couple of days.  From there the application was reviewed for content and then sent to a variety of insurance carriers that specialize in cyber liability for consideration.  Within three days, several quotes were received and a list of options presented.  What happens next turned the tables on what would become a potentially high cost claim.

Specialists with Cyber Liability Expertise

I worked with a specialty underwriting team that included a variety of enhancements to their application process whereas additional coverages would be offered.  Without the requested endorsements, the policy would have been adequate, but potentially void of certain insurable conditions that would expose the client to a costly claim.  In this case, the enhancements saved the day.

$135,000 Wired to a Fraudulent Company

In the seventh month of coverage, we received a notice from the client that they had wired $135,000 worth of their clients money to a vendor that was fraudulent.  It occurred as a result of email phishing where the hacker sent a series of emails to the accounting department of this firm along with attachments that appeared to be legitimate.  After several weeks, the hacker indicated that the bank account numbers had changed and requested the money to be sent to a new bank.  As instructed, the employee wired the funds to the vendor.

Why Hasn’t our Vendor been Paid?

Over the course of the next several days all was going according to plan for my client until the client asked about a delinquent payment issue to a particular vendor.  After investigating the circumstances, it was clear the employee mistakenly sent the amount to a hacker without knowing it.  An immediate inquiry was underway with the client and an assessment of all email systems.  It was clear the emails sent by the hacker were very well done and appeared to be authentic.  The cost of the vendor transfer was $135,000.  The monies transferred were on behalf of there client as they managed the transactions.

Claim Denied

The claim was sent to the insurance carrier for processing and remedy.  After several weeks the claims adjuster returned the claim as denied due to the funds transferred were not the client funds, but funds of their customer.  The insurance policy stipulated the funds would be protected only if they were the client’s.  After several iterations with the claims adjuster, it was clear they were not moving off their position.  That was until the rest of the policy was actually read.

Endorsements and Exclusions

As the policy read, it clearly stated that the monies associated with the client would be covered and that if the money that was transferred belonged to the client, then a claim would approved for settlement.  That was in the policy language within the body of the policy.

Only after additional review with the cyber liability specialist that worked with our team to put the program together was it uncovered that an endorsement had been added to expand coverage.  The term “Any and All” became a big issue.

Any and All

By working with our partner that specializes in cyber liability coverage, we were able to relay to the insurance claims adjuster that the policy would cover the monies of the insured client due to an Any and All provision added to the policy language, expanding the coverage from our insured money to all money regardless of its owner.  In other words, since the insured worked with their clients money on their behalf, it was now covered where previously not covered.


In an insurance policy, every word matters.  Equally important is working with a team of professionals that understand the limitations of insurance policies as well as enhancements.  In this case, for a premium of $1,750 my client avoided a $135,000 monetary loss if it wasn’t covered under insurance.

Key aspect to consider…make sure you read your insurance policy for what is covered, what is not covered (excluded) and any enhancements that may be added by endorsement that are located at the end of each policy.