Call Us 866.940.1101 ☰ ˟
866.940.1101
Logo
  • Home
  • About Us
    • About Us
    • Employee Directory
    • Partners Page
    • Event Calendar
    • Refer a Friend
  • Get A Quote
  • Products
    • Lawyers Malpractice Insurance
    • Professional Liability Coverage For Attorneys
    • Accountants Professional Liability
    • Dentist Malpractice Insurance
    • Business Owners Policy
    • Cyber Liability Insurance
    • Workers Compensation Insurance
    • Title Agents E&O Insurance
    • Paralegal Malpractice Insurance
  • Testimonials
  • Common Terms
    • Common Terms
    • Frequently Asked Questions
  • Blog
  • Contact
  • Areas We Serve
    • Grand Rapids, MI
    • Detroit, MI
    • Lansing, MI
    • Kalamazoo, MI
Home > Blog > Law Firm IOLTA Accounts may have No Insurance Coverage
THURSDAY, OCTOBER 27, 2022

Law Firm IOLTA Accounts may have No Insurance Coverage

Giant Pumpkin Face

Large balances in Escrow Trust and IOLTA accounts are an inviting target for thieves inside and outside the law firm. If these funds disappear, do you have insurance coverage for this event?

A “trusted” law firm employee manages the funds, balances the accounts, deposits funds, and writes checks. Unfortunately, a “trusted” employee is a leading loss cause for trust accounts. In addition to employee theft, someone outside the firm may dupe staff or attorneys into disbursing funds to the wrong party or an unauthorized person gains access to the IOLTA account. Or an outside person could drain the account with a bogus check.

Law firms carry attorney malpractice insurance and business owners insurance (BOP). But did you know that attorney malpractice insurers may specifically exclude coverage for these accounts because of theft? Or if not specifically excluded, it is not a covered cause of loss for an attorney malpractice policy. This leaves the BOP.

The BOP may contain coverage for funds theft. But often the sub-limits in the BOP for this coverage are too low to cover the IOLTA account balances. Law firms need to review their BOP coverage to determine if this sub-limit is adequate to meet their needs.

If possible, the firm should increase the theft sub-limit for Employee Dishonesty & Forgery coverage on the Business Owners to an adequate limit. But depending on the BOP insurer, they may limit this coverage to $25,000 or $50,000. A BOP may or may not cover theft by conversion. BOPs may sub-limit theft of funds via computer funds transfer fraud.

A properly endorsed Cyber policy may provide coverage is a computer if involved in the theft. But even today not all fund thefts involve a computer.

A better solution is purchasing a properly endorsed Crime Insurance policy. In addition to Employee Theft; a crime insurance policy can cover perils such as:

-          Computer & Funds Transfer Fraud’

-          Money & Securities

-          Depositors Forgery or Alteration

-          Credit, Debit, or Charge Card Forgery

-          Money Orders & Counterfeit Currency

-          Investigation Expenses

-          Identity Theft Recovery Expenses Reimbursement

Yes, crime insurance is not inexpensive. But consider the consequences if your IOLTA account funds disappear.

 

Lee

 
 
   Contact Me Today
   Lee Norcross, MBA, CPCU

    Managing Director, CEO
    Click here to contact Lee Norcross, MBA, CPCU, CPIA

     (616) 940-1101 Ext. 7080

 
Posted 2:16 PM

Tags: iolta accounts, crime insurance
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2013
  • 2011

  • lawyers professional liability insurance(429)
  • attorney malpractice insurance(400)
  • attorney malpractice(337)
  • legal malpractice(225)
  • legal liability(134)
  • cyber insurance(106)
  • data breach(92)
  • ethics(87)
  • erp(57)
  • malpractice insurance(56)
  • claims(39)
  • title agency e&o(36)
  • accountant e&o(34)
  • extended reporting period endorsement(30)
  • tail(29)
  • phishing(25)
  • legal malpractice insurance(23)
  • prior acts(22)
  • claims made coverage(21)
  • extended reporting period(21)
  • cyber security(20)
  • cyber liability(18)
  • accountant errors & omissions(18)
  • claims reporting(18)
  • crime insurance(16)
  • ransomware(16)
  • claim prevention(16)
  • attorney protective cle(14)
  • the hartford weekly newsletter(14)
  • attorney protective cle webinar(14)
  • 2022 mcgowan pro cpe webinar for accountants(13)
  • professional liability insurance(13)
  • business owners insurance(12)
  • mcgowan webinar series for cpas 2021(12)
  • retirement tail(12)
  • attpro tip of the month(12)
  • legal liability insurance(11)
  • fee suits(10)
  • bop(10)
  • full prior acts(10)
  • cyber crime(10)
  • accountant errors & omissions insurance(10)
  • prior acts date(9)
  • step rating(9)
  • non-practicing erp(9)
  • cyber liability insurance(9)
  • title agent errors & omissions(9)
  • claims made(9)
  • coverage(8)
  • webinar(8)

View Mobile Version
Logo
Quick Links
Home Our Products Customer Service Payment Options Common Terms
About Us Refer A Friend Our Carriers Blog Contact Us
Location
2430 Camelot Ct SE
Grand Rapids, MI 49546

Local: 616.940.1101
Toll Free: 866.940.1101
Email: info@L2ins.com
Facebook Twitter Social LinkedIn
© Copyright. All rights reserved.
Powered by Insurance Website Builder