Cyber fraud is quickly becoming real estate professionals’ worst nightmare, causing millions of dollars of damages each year. Part of your strategy for defending against cyber crimes should include proper insurance coverage. Because cyber insurance is a relatively new product and constantly evolving, you should take time to learn about the different types of policies that are available and which are particularly suited to the real estate industry.
Insurance coverage typically offers either first-party protection (dealing with losses the insured incurs) or third-party protection (which involves liability the insured may owe to third-parties, like consumers, as a result of a cyber crime). A comprehensive cyber-insurance policy will normally provide both types of coverage.
The biggest cyber dangers facing the real estate industry today are stolen wire proceeds, theft of sensitive consumer information, and threats to hold data hostage unless a ransom is paid (ransomeware). A good cyber policy will cover money lost through a wire-fraud scheme, probably through a litigation clause or third-party coverage. Also among your considerations for coverage should be protection for data loss and restoration; expenses associated with business interruptions; and coverage for electronic extortion and ransomeware.
Pay particular attention to the wording of the insurance policies you are considering. For example, some policies do not cover losses that you incur as a result of hacking experienced by outside contractors. That exclusion could be especially problematic if you rely on outside vendors for your email or data management, whether through the cloud or otherwise. Also, it is usually worth the effort to obtain quotes from a few different insurers so you can compare and contrast the available coverages and premiums. Finally, pay close attention to the effective date of the proposed coverage. If you can get coverage for dates in the past, that is normally best because often cyber fraud is not uncovered until long after the bandit has made off with his ill-gotten gains.