What type of coverage indemnified the bank when a retailer sued after the bank refused to pay for fraudulent checks?

The type of coverage that indemnifies the bank when a retailer sues after the bank refuses to pay for fraudulent checks is forgery and alteration coverage. This coverage is specifically designed to protect insured organizations, such as banks, from losses incurred due to fraudulent activities involving checks and other documents.

In cases where checks have been altered or forged, the financial institution may incur losses if it is forced to pay out on checks that are not legitimate. Forgery and alteration coverage allows the bank to recover those losses, providing a safety net against claims made by other parties—such as retailers—in instances of cheque fraud. This kind of coverage is particularly important in the banking sector, where the handling of checks is prevalent, and fraudulent activities can lead to significant financial repercussions.

The other types of coverage listed typically do not address the specific risks associated with fraudulent checks or similar financial instruments. General liability generally covers a range of liabilities resulting from bodily injuries or property damage, while property damage does not pertain to forgery or financial loss. Cyber liability coverage addresses risks associated with data breaches and cyberattacks rather than issues related to forged documents or checks.