Life as a real estate agent is busy, always on the go and juggling multiple clients. You are often being pulled in multiple directions while staying focused on helping your clients get through what is regularly a stressful and complicated transaction. Now you have a new thing to worry about, cybercriminals. The real estate industry has been targeted by cybercriminals as a lucrative opportunity to steal information and money. There are two ways to help combat this new risk:
- Increase your cyber awareness for yourself and your clients to help avoid becoming a victim.
- Purchase a cyber liability policy to cover you in the unfortunate event of a breach.
If you are reading this blog post, you have begun #1. This blog is designed to be a repository for useful risk management information that can help real estate professionals stay informed and increase one’s cyber awareness.
The 2nd way, owning a cyber liability policy, is a long-term commitment to having professional resources on your side when the cybercriminals come knocking. It is our opinion that unfortunately, it is WHEN not IF they attempt to hack your systems, so let’s talk (in plain English) about the benefits you receive from a cyber liability policy:
1) Breach Liability: 2 words here.. the 1st is breach. What is a breach? A breach (short for data breach) is a security incident in which sensitive, protected or confidential data/information is copied, transmitted, viewed, stolen or used by an unauthorized individual. The most common real estate system that is breached is email and when this happens it is referred to as a Business Email Compromise. The 2nd word is Liability. The state of being legally responsible for what the bad guys do with the information they have stolen from you to harm someone else. There are 2 situations that come top of mind when thinking about cyber liability for real estate agents: Wire Fraud at Closings and Online Postings of copyrighted imagery.
a. Wire Fraud at Closings: We hear this happening often when an agent’s email is hacked and the bad guys find out everything about a closing and use that information to get the buyer to transfer money to the wrong bank account which is controlled by them. The hackers send an email to the buyer or to the buyer’s agent or to another trusted 3 party involved; which appears to originate from a trusted source such as your email, everything is accurate except the wire transfer information. In these situations, it is important to move quickly and contact the insurance carrier who knows what to do to start the process of halting the funds from being delivered. (you often have 48 hours to clawback funds through the US banking system)
b. Online Posting: As we use the web and social media more and more, real estate agents run the risk of causing personal injury as well as copyright/trademark infringement which includes: invasion of privacy, public disclosure of private facts, libel, slander, plagiarism or negligence. To ensure you are covered under policy conditions, we recommend that all agents who are active on social media become officially part of the agency’s communication department and are trained in appropriate procedures and protocols. The most common issue here is the unauthorized use of copyrighted images in listings or other marketing materials. The image owners are looking for these violations and will serve you with a demand letter for several thousand dollars because you used their image without the proper approval/compensation.
2) Breach Rectification: This is a benefit of coverage that provides resources to help handle a breach in progress as well as clean up after it has stopped. You have access to a team of professionals which starts with a Data Breach Coach. (click here to find out what this is) , the second is the cyber forensic professional needed to perform a structured IT investigation to determine what happened to which systems/accounts/devices and what information was taken and hopefully figure out by whom. The 3rd element is the effort to comply with the various regulations required to notify your affected clients including credit protection services. Each state has its own laws which determine: what constitutes a breach, definitions of personal information, timing & method of notice, etc.
3) Digital Crime: This is coverage that mostly benefits the agency more than the agent. In this section, there is protection in case the agency has been deceived into sending their own money or money in escrow (depending on the policy language) to the wrong account (akin to wire fraud mentioned above but in reverse) as well as if the bad guys directly transfer out money from the agency’s financial accounts without authorization. There is also coverage for Cyber Extortion which is when hackers take information or restrict access to systems and demand a ransom. Extortion can take the form of locking you out of a system or taking data from a system and threatening to make that information public on the web or the dark web for sale to the highest bidder. The is very helpful to have an experienced cyber insurance professional on your side to negotiate and handle these cyber criminals during these stressful times.
The important takeaway from any well-crafted cyber liability policy is that it aids the agent and agency during and after a cyber event as well as provides legal protection in the event of a lawsuit for 3rd party losses.
* Every coverage situation is different, and the final outcome depends on the unique facts, law, and insurance policy involved. The cyber policy contains reductions, limitations, exclusions, and termination provisions that impact coverage for a specific event. Full details of the coverage are contained in the policy
