Cyber insurance: What it covers, how much it costs to protect yourself

CHICAGO (WLS) -- At a time when more people are working from home and shopping online, you may be wondering if you should get cyber insurance.

The ABC 7 I-Team talked to a family who was fooled into wiring away several thousand dollars to criminals.

They thought they were wiring $20,000 for their down payment on a home, but that money ended up in the hands of scammers.

"It's disheartening that there are people out there are taking advantage of people's trust," said Arlene Rovner, who loaned her daughter Jessica $20,000 dollars for a down payment on her first home.

"My mom was doing something nice and was taken advantage of," added Jessica, who was waiting for her Berkshire Hathaway HomeServices broker to send closing instructions. Somehow that email was intercepted. Instead she received a scam email with fake instructions. The Rovners unknowingly sent the 20 grand to crooks.

"She gets to the closing and they said, 'We have no money here,'" Arlene Rovner explained.

The Rovners were conned by what's known as a business-email-compromise scam that the FBI says cost businesses and consumers 1.7 billion dollars last year.

Jessica said the email looked so real and didn't notice the email address changed.

"The name of my realtor and signature at the bottom sounded like any other email I got from her," Jessica told the I-Team.

The fraudster changed the account number of the title company to a private individual account. Key Bank received the money then made the deposit without checking whether the account number matched the title company. Thankfully, Jessica was able get more money for the down payment so she was able to still buy the home.

"Hackers, or other cyber criminals, they target us in different ways," says Jason Metz, an advisor with Forbes. He says you should ask companies if they have cyber liability insurance that may cover these types of incidents.

Even if they do, consider getting your own cyber coverage.

"The FBI was showing back in 2015, there was about 1,000 ransomware attacks per day," Metz said. "Now there's about 4,000 per day, so that was a 300% increase so it is a growing problem."

Metz says for only $25 a year, you can get $15,000 worth of coverage, but policies can go up to $1 million. They could cover anything where money is stolen from you online or if you are victim to a phishing scam.

Most insurers are now allowing you to add cyber insurance to an existing homeowners policy. Just like any other insurance you'd have to save proof to file a claim.

"It's worth asking your agent, if it's available, what the price would be, how much coverage you're gonna get because there is some value to what it does cover," says Metz, adding that cyber insurance could have potentially covered an online scam like Rovner's.

The mother and daughter sent letters to their real estate broker and the bank to see what can be done to recoup their costs.

The I-Team reached out to all of the entities involved. Key Bank told the I-Team they're "unable discuss any specifics of client interactions".

Berkshire Hathaway said they reviewed all of the emails related to the transaction and "found nothing to indicate that our email systems were compromised." They said they had Rovner sign anti-fraud disclosure form intended to warn her about this type of threat.

"The way everything went down is obviously really distressing," said Jessica.

The victims in this case filed a police report and a report with the FBI. They have not had any luck getting a refund.

However, the FBI tells the I-Team, if you file within 72 hours, there is a better chance they can track and recover the funds.

Cyber Scams and Staying Safe:

General Tips:

• You can avoid being the victim of wire fraud and closing money scams by being suspicious.
  Always speak to your broker via phone prior to following wiring instructions, even if the instructions appear to be in response to an email chain.
  Change your email passwords frequently
  Double check all emails and email addresses.
  Avoid emailing wiring instructions or discussing any business related to a purchase or sale on an unsecured network (like on public WiFi at a local coffee shop).

Alternate Ways to Protect Yourself

There is a statute in IL that does discuss that transactions involving amounts of money greater than or equal to $50,000 must be in the form of "good funds." This will require wired funds, checks from a closing agent or title company, a cashier's check or a check where the funds have been "collected."

What is the Real Estate Industry Doing to Protect Clients?

Considerable education efforts by the National Association of REALTORS, Illinois REALTORS and Chicago Association of REALTORS have been undertaken to ensure that consumers and REALTORS are aware of scams such as the closing money wire fraud. We discourage REALTORS from discussing personal financial information over email, and there is an incredible amount of information available online for access.

To submit an internet crime complaint with the FBI: https://www.ic3.gov/Home/ComplaintChoice