Specialty · Insurance Term
Social Engineering Fraud
Definition
Social engineering fraud is a scam where someone tricks an employee into sending money or information by pretending to be a trusted person, such as a vendor, tenant, executive or closing company. Coverage usually has to be added to a crime or cyber policy.
In Plain English
A common version: an email that looks like it's from your contractor says their bank account changed and asks you to send the next payment to a new account. An employee pays, and the money is gone.
Many crime policies cover funds transfer fraud or computer fraud only when an outsider gets into your systems or instructs your bank without permission. When your own employee is fooled into sending money, those coverages may not apply. A specific social engineering endorsement on a commercial crime insurance or cyber policy is often needed.
These endorsements commonly have modest sublimits and may require verification steps, like calling back a known phone number before changing payment instructions.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: a property manager gets an email that looks like it's from the roofing contractor, asking that a $120,000 payment go to a new bank account. The manager pays. With a $100,000 social engineering sublimit, and if the policy's conditions were met, the policy might pay up to $100,000, less the deductible.
What to Watch For
- Ask whether your crime or cyber policy covers social engineering, and what the sublimit is.
- Require a phone call to a known number before changing any payment instructions.
- Train staff who handle payments, wires and closings.
- Check whether the policy requires specific verification steps to be followed.
Last updated October 14, 2026 · Primesure editorial team · How We Write