Title & escrow companies face Cyber exposures and should be buying Cyber Risk Insurance for protection. While the cost of Cyber Risk insurance is not high, the consequences of being without can be. Most Cyber Risk commentary focuses on the risk of data breach, which is a real exposure for many organizations including real estate companies. However, a data breach is not the only risk. Two recent lawsuits involving the theft of money from escrow companies using online banking systems demonstrate the threat and need for coverage:
Choice Escrow recently fell victim to the Zeus virus, and lost a significant sum of money from one of its escrow accounts. According to reports and the lawsuit, hackers used the Zeus virus to steal Choice Escrow’s online banking access information, and wired $440,000 out of the escrow account to a foreign bank account. Choice had to scramble to cover the stolen escrow monies, and is now suing its bank for the amount lost.
In a similar situation, Village View Escrow has sued a bank for the loss of $465,000 (see here, here, here). Hackers used its online banking access information to initiate a series of wire transfers out of its accounts. The escrow company had an email verification service, but it was disabled by hackers.
The exposure to theft of money is real, and with the right policy, theft of money by hackers can be covered through Cyber Risk Insurance.
Cyber Risk insurance coverage provides protection from various risks associated with technology, including data breaches, but policy forms are not all the same. Cyber Risk insurance is easy to obtain, provides broad protection and is inexpensive (see here, and our prior post here).
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