If you believe the theft coverage included in your property policy would cover you if you transferred money or products due to an email or even phone call scam, you are likely mistaken. Most property policies exclude such coverage in a number of places. This three part series will discuss the policy, training and coverage that can minimize this risk of loss.
For instance, property that has been transferred to a person or to a place outside the described premises on the basis of unauthorized instructions and voluntary parting with any property by you or anyone else to whom you have entrusted the property if induced to do so by any fraudulent scheme, trick, device or false pretense are normally excluded in property policies.
Your first defense to this potential attack should be to create sound financial policies such as, but not exclusive to:
- Have the person who cuts the check be different from the person who reconciles your accounting records. Also, be sure to reconcile your accounts in a timely manner. What is timely will differ based upon the frequency of your transactions but should not be less than monthly.
- Automate as much of invoice collection and bill payment as if feasible for your business. Of course, this is much more difficult in the early stages of your business but as your business becomes more established, this is highly recommended.
- If you are your accountant, reserve a day for bill payment and overall financial duties and pause any client facing or business development duties. That way you are more mindful as you review and respond to financial inquiries.
- If your expenses are pretty regular and therefore the need to transfer funds to an unknown account are infrequent you can protect yourself from an unauthorized instruction scam by requiring the person cutting the check to get verbal authorization or to submit a password along with the instruction.