Small Business Insurance Protection from Electronic Fraud and Theft


You wouldn’t close shop for the night without locking up tight. You’d never leave the cash registered open and unattended. But failing to protect your small business’s bank account from hackers and fraudulent electronic fund transfers puts you at even more risk. The FBI claims to have investigated over 200 cases of illegal Internet-enabled ACH (automated clearing house) and wire transfers between 2008 and 2009, totaling about $100 million, according to a report in USA Today.  Insurance companies offer extensions to their standard business owners’ policies (BOPs) to help small businesses cover losses from computer and funds transfer fraud; but most place dollar caps per incident on the coverage.  Even so, it’s probably a smart investment if you rely heavily on electronic banking (and who doesn’t these days). Smarter yet is to take the preventive steps to avoid being a target for cybercrimes.

Have a Dedicated Computer for Banking
The bad guys are ingenious but like most crooks, they’re going to take the path of least resistance. That’s why hackers frequently target your small business’s computer instead of your financial institution’s system. The easiest means of access is via an email attachment with an infected file or a link to a bogus website.  Following the link or visiting the website allows them to infiltrate your computer with malware. Once they’re inside your system, they can access banking logins, passwords and other sensitive data. Of course you should have firewalls in place and keep your antivirus software current, but that alone won’t protect you completely. Far better, experts say, is to 1) have a dedicated computer that isn’t part of your LAN, 2) isn’t used for email, web browsing or anything but electronic banking and 3) whose use is restricted to a few trusted employees.  You can also consider using an obscure operating system since hackers seldom bother writing malware programs for those.

Educate Your Employees
Be certain that whoever handles your online banking knows about potential threats, the latest scams and current advisory information for dealing with problems.

Monitor Your Accounts
If your financial institution has a service to alert you to unusual or excessive account activity, sign up for it. You should also make it a habit to monitor your accounts daily and reconcile your monthly statements.

Secure Your Data and Records
Opt for electronic bank statements to eliminate having to store hardcopy and paper checks. Protect your passwords and account numbers. Change your account passwords periodically. Lock up unused business checks. Instead of allowing many employees to use the company credit card, reserve that privilege for a few trusted people and ask everyone else to use their personal cards and submit a request for reimbursement.

While small business insurance can protect you to some extent from electronic fraud and theft, your first line of defense is a sound security protocol and commonsense.  Shop for small business insurance quotes on

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