Exclusion Bars Coverage For Social Engineering Scheme
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Exclusion Bars Coverage For Social Engineering Scheme

An insured company suffered losses due to a fraudulent email scheme perpetrated by its employees. The employees were authorized to enter its computer system and then were responsible for changing wiring information and sending four payments to a fraudster’s account. Because the employees had authority to enter the system, the Ninth Circuit affirmed summary judgment for the company’s insurer, Travelers, finding an exclusion barred “computer fraud” coverage for a $700,000 loss resulting from the social engineering scheme. The exclusion specifically provided the policy “will not apply to loss resulting directly or indirectly from the input of Electronic Data by a natural person having the authority to enter the Insured’s Computer System.” 

Aqua Star (USA) Corp v Travelers