July 10, 2017

Cyber Liability Claims: Construction Industry

 The construction industry is changing and we are seeing more companies employ technology to manage employees, projects and equipment, increased usage of onsite scanners and drones and a focus on data and predictive analytics to help avoid problems that may arise.

The use of technology also creates new exposures for these companies as they are now digitizing and storing information that they would never have thought of before. This digitization opens up the company to Cyber exposures for the company concerning:

    • PHI and PII of Employees and Applicants
    • Corporate Data of customers
    • Cyber Extortion and Phishing attacks that     
       compromise data or funds of the company

To find out more information about Cyber Liability and how it may help you and your company, please contact us. 

Cyber Crime

The controller of a general contracting firm received an e-mail from a supplier requesting that a payment in the amount of $58,450 be sent via wire transfer. After wiring the funds, the controller discovered that the wire transfer request was not legitimate; she had received a “spoof” e-mail, sent by a hacker posing as the supplier. The insured’s bank refused to return the funds because all wire transfer protocols were followed, and the wire appeared to be legitimate. Cyber Crime insurance covered the full amount of the fraudulent wire transfer.

Multimedia Liability 

A general contractor received a “cease and desist” demand letter alleging copyright infringement after the contractor pulled an image from Google and used it on its website and online promotional material. The copyright holder of the image saw the website and promotional and promotional material and subsequently demanded removal of the image and compensatory damages. Multimedia Liability insurance covered the costs to defend the claim and the compensatory damages. 

Proactive Breach Response 

A contractor discovered that his storage unit had been broken into and thousands of old contracts containing personally identifiable information were stolen. The contractor engaged a public relations firm to help mitigate the potential impact of any negative publicity resulting from the incident. Breach Events Costs insurance covered the PR firm’s fees as proactive privacy breach response costs.


An employee in the operations division clicked on a link from a supplier to some new catalog items. However, after clicking the link, the employee realized that the email was in fact from an address designed to look very similar to one he regularly saw. The click caused malware to spread throughout the system, encrypting all of the company’s files. Data in the computer system was unusable for a week, resulting in materials not being delivered to sites on schedule. As a result, a building project was finished two weeks late, causing a contractual penalty from the builder’s client.


An employee in the finance department received an email from the CEO, instructing them to wire $100,000 to a bank account in order to pay for new construction materials. As the CEO was on a business trip and could not be contacted in the office, the employee made the transfer. Three days later, the CFO realized the money had been transferred and called the bank to recall the funds. However, the majority of the funds had already been processed and the bank was unable to recover the 80% of the funds. This left the company with a loss of profits for the year and a delay on the building materials they actually wanted to buy due to cash flow problems.


A hacker was able to obtain W-2 tax information for all of the employees at a construction company, including names, salary details and social security numbers. They proceeded to change bank account details to an account held in their name and divert the salaries for that month. In addition, the hackers filed fraudulent tax returns for the employees, collecting tax rebates on their behalf. The company had to provide written notification to all employees that their data had been stolen as well as reimburse them for the salaries and tax rebates.


Categories: Small Business, Cyber Security