Forgery Insurance

What Does Forgery Insurance Mean?

Forgery insurance is a policy that protects individuals or companies from loss or damage resulting from altered, forged, or counterfeit financial instruments. It is also referred to as alteration coverage, depositors’ forgery insurance, or a forgery bond.

Insuranceopedia Explains Forgery Insurance

A person or company that falls victim to a forged financial instrument, such as checks or bank drafts, can be held liable for thousands or even millions of dollars. To protect themselves from this risk, they can obtain forgery insurance. In such cases, the insurer compensates the victim of a counterfeit check or altered bank deposit for the loss incurred, up to the policy limits.

Forgery insurance is often sold on its own or included in a broader commercial crime insurance policy, which also covers employee theft, robbery, and computer fraud. Because many forgery cases involve someone inside the company with access to checks or accounts, businesses with this coverage usually pair it with internal controls to prevent employee theft and fraud.