Most crime insurance policies exclude coverage when an employee is tricked into transferring money or property to an unauthorized party. This is considered to be willingly transferred, and is commonly known now as a “Social Engineering” crime. Social Engineering is not within the scope of most existing crime policies, which are intended for crimes such as holdups, robbery, or computer hacking by an outsider. Willingly parting with money or property is also a standard exclusion on crime policies.
The sign of a robust economy is the number of contracts we are asked to review for our clients. Boston is genuinely a hub of global technology services, contracting with some of the world’s largest enterprises.
Our review of clients’ contracts involve both advising on adequacy of limits, as well as specific comments on policy terms and clauses. Privacy & Security coverage is commonplace now, provided by specialty cyber-liability policy forms.
Some specifically troubling areas are clauses that stipulate that the entire client/vendor contract be an insured contract on the vendor’s policy, and clauses requiring the continuation of insurance for a number of years, usually three, following completion of the work.
The “insured contract” issue could easily run six figures in cost since intellectual property indemnification is standard in every contract and IP insurance is expensive. Contractual requirements for “continuation of insurance” are risky since there are no guarantees of insurability beyond the expiration of this year’s policy.
Being in non-compliance with your insurance requirements could be thorny should disputes arise over other aspects of your service.
Avoiding that requires advice, negotiation, and securing adequate coverage for compliance.