Invoice fraud sits in a frustrating grey area. You think, \u201cSomeone hacked our email, changed the bank details, and we lost money. Surely cyber insurance covers that.\u201d Sometimes it does. Sometimes the policy says no.<\/p>\n
Imagine a supplier sends an invoice by email. Later, someone gets into that conversation and changes the bank account details. Your finance team pays the invoice. The money goes to the criminal.<\/p>\n
That’s invoice fraud, often linked to business email compromise. The cyber element can be obvious. The insurance response isn’t always obvious.<\/p>\n
Some cyber policies include cover for funds lost because of fraudulent instructions that result from a network intrusion or compromised email account. Others draw a much harder line around social engineering, especially when an employee willingly makes the payment after receiving a fake instruction.<\/p>\n
Don’t focus only on the phrase \u201ccyber insurance.\u201d Read the actual coverage section.<\/p>\n
Look for language covering social engineering fraud, fraudulent funds transfer, computer fraud, or business email compromise. Then check the exclusions. A policy could provide protection for one type of invoice fraud while excluding another because no system was actually breached.<\/p>\n
\u2022 A hacked mailbox followed by altered payment instructions may fit cyber-related coverage, depending on the policy wording.<\/p>\n
\u2022 A fake invoice sent from a lookalike address is trickier, particularly if nobody’s account was compromised.<\/p>\n
\u2022 Social engineering cover is often the important bit, though limits can be much lower than the main policy limit.<\/p>\n
An exclusion doesn’t necessarily mean every invoice fraud claim is dead. The exact cause of the loss still matters.<\/p>\n
For example, a policy might exclude losses caused by voluntary transfers of money. But another section could separately cover fraudulent electronic transfers following a computer attack. Those details matter because insurers look at how the incident happened, not simply what the payment looked like afterward.<\/p>\n
And this is where buying a policy based on the brochure alone is a bad idea. The headline sounds reassuring. The small print decides the claim.<\/p>\n
Before assuming invoice fraud is covered, check these points.<\/p>\n
\u2022 The definition of \u201ccomputer fraud\u201d matters because some policies require an actual attack on a computer system.<\/p>\n
\u2022 Social engineering coverage is worth checking separately. It can address situations where an employee is tricked into sending money.<\/p>\n
\u2022 Sublimits can shrink the payout considerably, even where the underlying claim is covered.<\/p>\n
\u2022 Some policies require specific security controls, and failing those conditions can create another problem during a claim.<\/p>","protected":false},"excerpt":{"rendered":"
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