Challenge: Fraudulent communication costs businesses thousands.

Takeaway: Having a comprehensive cyber security policy can save your business from taking the financial fall after receiving communication from a scammer.

As technology shapes how businesses operate, cyber risks have become part of everyday operations. Email, online banking, and digital payment systems create efficiency, but they also create new opportunities for fraud. Cyber insurance plays a critical role in helping businesses recover when those risks turn into real financial losses.

One business owner received a call appearing to come directly from his bank. The phone number matched the bank’s official number, and the caller claimed there were multiple fraudulent wire transfer attempts on the account. The caller walked the owner through each attempted wire and explained that verification codes would be sent to cancel them. What the owner did not realize was that those codes were dual authentication codes being used to authorize the wires, not stop them. As a result, $48,000 was transferred out of the account.

Once the scam was discovered, the owner immediately contacted his insurance agent at Hotchkiss. Because he carried a cyber insurance policy with social engineering coverage, the loss was reported and investigated. While the process took approximately five to six weeks to fully resolve, the policy reimbursed the full amount of the stolen funds, after their deductible, helping the business recover without a lasting financial hit.

In another situation, a company’s accounting department received an email that appeared to be from the business owner. The message requested payment to a new vendor for $56,000 and looked legitimate at first glance. Shortly after the payment was sent, the team noticed that the email address was slightly different from the owner’s actual address. The email was fraudulent.

The company acted quickly, reported the incident, and filed a cyber insurance claim. Thanks to the coverage in place and prompt reporting, the funds were recovered and returned to the business.

In both cases, the businesses did many things right once the fraud was discovered. Most importantly, they had cyber insurance in place before the loss occurred. Cyber policies are designed to respond to modern threats like social engineering, fraudulent transfers, and impersonation scams. Our Hotchkiss agents were there to assist throughout the claims process, joining calls with forensic investigators and insurance carriers to help navigate technical details and ensure the clients understood each step as it unfolded. As these attacks become more sophisticated, cyber insurance has become a key part of protecting business finances and operations.

While insurance provides critical protection, prevention still matters. Employees should be trained to carefully review email addresses, especially when requests involve money, urgency, or changes in payment instructions. Verification should always happen through a second method, such as a known phone number or internal confirmation process. Authentication codes should never be shared over the phone or by email. If a call seems suspicious, it is best to hang up and call the organization directly using a trusted number. These simple steps can prevent costly mistakes.

Cyber threats are no longer limited to large corporations. Businesses of all sizes are targets, and the financial impact can be immediate. Cyber insurance helps close the gap between prevention and recovery, providing support when the unexpected happens. We work with clients to help them understand their cyber exposures and build coverage that fits how they operate today. If you have questions about cyber insurance or want to review your current protection, your Hotchkiss team is here to help.