Cyber security is a growing issue globally, and the real estate industry is particularly vulnerable because the transactions you’re dealing with are of such high value. This, unfortunately, provides sufficient incentive for criminals to try and make a quick dollar.
According to the Forbes Real Estate Council, real estate wire fraud is one of the fastest growing cyber crimes in the United States.
With more than 300,000 complaints to the Federal Bureau of Investigation (FBI) in 2017 and more than $1.4 billion lost, the real estate sector accounted for nearly 10,000 complaints and $56 million lost.
The FBI says, in their 2017 Internet Crime Report, that the real estate sector was heavily targeted with many victims reporting losses during real estate transactions.
How Does Wire Fraud Happen?
One of the main ways real estate offices are compromised through cyber attacks is wire fraud. This occurs when transaction funds are transferred into a fraudulent account.
In most cases, it happens when wire instructions are changed by someone pretending to be a real estate business.
Sometimes hackers are able to install a virus on a computer which provides access to your emails. This can happen via a phishing email or even a thumb drive provided as a “gift”.
It’s not only malicious attacks from hackers which can put your business at risk. Technical glitches and, of course, human error can also be damaging to your IT systems, causing disruption to your business as well as economic loss.
CRES Cyber Liability Coverage
Errors & Omissions (E&O) insurance policies are not typically designed to cover criminal activities such as wire fraud. Some companies claim to offer wire fraud coverage, but it’s limited, requires your confirming wire instructions, or only works if Personally Identifiable Information (ie. Social Security Number, Date of Birth, etc.) is stolen. Few real estate licensees personally confirm wire instructions or keep highly personal client data on their computers, so coverage in case of a claim is unlikely.
With this in mind, CRES E&O Insurance includes up to $50,000 Cyber Notification (data breach notification coverage) as part of our “Broad Form” Coverage endorsement, part of our new bundle option for real estate offices, and standard on many individual policies.
This coverage includes first party (the insured) Cyber Notification coverage as it pertains to client notification costs due to data/security breach.
You can add limited Cyber Liability (Privacy and Network Security Events) coverage to cover first party (the insured) and third party damages and defense costs.
This expanded Cyber Liability option covers first and third parties affected by a cybersecurity breach — where personal information was stolen and the parties may have suffered damages from Identity Theft or similar misuse of their personal information.
Coverage starts at just $35 to cover damages and defense costs up to $50,000 for one licensee, and you can increase your coverage to $100,000 or $250,000 at minimal cost.
The Cyber Notification and Cyber Liability coverages do not cover the actual transfer of money or security.
We recommend a separate Comprehensive Cyber Liability policy to cover a broader range of Cyber events like ransomware and wire fraud.
This type of independent Cyber policy can cover your real estate business for growing threats like wire fraud.
We’ll shop the top Cyber insurance companies to find the broad coverage you may need.
CRES Can Help Your Real Estate Office with All of Your Cyber Liability Insurance Needs
To obtain a quote or your real estate office, click here to download a brief questionnaire, and then return it to CRES at email@example.com or fax to 1.858.618.1655. Or call us at 800-880-2747 for a confidential discussion with one of our friendly CRES insurance specialists. All CRES E&O + ClaimPrevent® policies include access to legal assistance 7 days a week. Our legal helpline is manned by highly qualified and experienced real estate attorneys, so you can get the answers you need to prevent claims, not just manage them after they happen. To find out more, contact CRES.
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
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