The $483 Greenville Federal Credit Union in South Carolina is suing TruStage Insurance Co. in Madison, Wis., over whether the credit union insurance policy provides coverage for the $82,400 ATM jackpotting loss.
On Jan. 16, 2024, criminals accessed the internal software of the credit union’s two ATMs, disconnected electronic communication equipment, and they attached an electronic device that forced the machines to dispense cash without routing the transactions through GFCU’s network. A second electronic device hidden atop the ATMs acted as a hotspot to control them remotely. The thieves also used a plastic card as an authentication mechanism, but the data on the card was not used to process or route the transactions to dispense cash, according to GFCU’s investigation.
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The insurer denied the credit union’s claim citing the policy’s plastic card/PIN exclusion, which bars claims involving the use of a personal identification number, a plastic card, other type of card, or plastic card numbers to access an ATM or complete a transaction. TruStage also argued that the policy excludes losses resulting from burglary, robbery, or unexplained disappearance or destruction of an ATM or its contents.
In its denial letter, TruStage stated that if two exclusions apply to a loss, coverage is limited to exceptions common to both. The only shared exception cited was “employee or director dishonesty coverage,” which does not apply in this claim.
GFCU argued in its lawsuit that the policy’s “kiosk endorsement” and “on premises coverage” provisions should apply for insurance coverage.
The kiosk endorsement modifies the plastic card/PIN exclusion, allowing for coverage of electronic crimes because the ATM criminals used a plastic card only as an authentication mechanism, according to GFCU.
TruStage countered the evidence showed card numbers were used to route transactions through a card network, and there is no proof that the cards were used solely as an authentication tool, an essential condition for coverage under the policy’s endorsement.
TruStage did not dispute GFCU’s on premises coverage provision could apply to losses involving covered property, including the ATMs.
READ MORE: Greenville FCU v. TruStage civil complaint and exhibits, and TruStage’s response to the civil complaint.
Peter Strozniak can be reached at pstrozniak@cutimes.com
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