With the enormous amount of sensitive information that’s stored digitally, companies like yours need to take proper measures to ensure this data is never compromised.
It’s your responsibility to protect your clients’ data.
Failing to do so puts your clients’ data at risk of being compromised, and can be detrimental to your business.
And it’s important to remember that no organization is immune to the impact of a cyber crime.
Which means that cyber liability insurance should be an essential component to your risk management program.
What is Cyber Insurance?
A typical business insurance policy does not protect against most cyber exposures. Standard business insurance policies are written to insure against injury or physical loss and will do little, if anything, to protect you from electronic damages and the associated costs that may incur.
Risk exposures are vast, ranging from the type of content you put out on your website to stored customer data.
A cyber insurance policy is a single, stand-alone policy that’s separate from your general business insurance policy, and it’s designed to meet the specific needs of your business.
A typical cyber insurance policy offers the following key coverages:
Cyber liability insurance policies are tailored to meet your company’s specific needs and can offer a number of important coverages, including the following key coverages:
Data Breach Coverage
Many small employers falsely believe they can elude the attention of a hacker, yet studies have shown the opposite is true – a growing number of companies with fewer than 100 employees are reporting data breaches every year.
What is a data breach?
A data breach is an incident where Personal Identifying Information (PII) is accessed and/or stolen by an unauthorized individual. Examples include:
- Social security numbers
- Credit card information
- Tax identification information numbers
- Payroll information
- Medical information for an employee or customer
- Other personal information of a customer, employee or contractor
In the event of a breach, employers are required by law to notify affected parties. This can add to overall data breach costs, particularly as it relates to security fixes, identity theft protection for those impacted by the breach and protection from possible legal action.
Business Interruption Loss Reimbursement
When you think about what usually causes a business interruption, natural disasters such as fires, earthquakes and floods probably come to mind first.
While natural disasters are still the main reason for an interruption, another cause is quickly moving up the ranks: cyber attacks. As businesses continue to rely on computers and digital storage of essential data, cyber attacks will continue to be a potential exposure.
How can a cyber attack cause a business interruption?
Hackers, thieves and other unauthorized individuals have become adept at exploiting weaknesses in a business’ computer system, whether through traditional hacking methods or social engineering.
There are several types of cyber attacks that could completely cripple your ability to perform normal business activities, including:
- Malicious code that renders your website unusable
- Distributed denial of service (DDoS) attacks that make your website inaccessible to employees and customers alike
- Viruses, worms or other code that deletes critical information on a business’ hard drives and other hardware
Unfortunately, many smaller businesses don’t have the manpower available to detect the problem and work on fixing it, which only increases the length of an interruption.
This costs your organization time. And the saying goes, time is money.
Cyber liability insurance policies may cover your loss of income during these interruptions.
What’s more, increased costs to your business operations in the aftermath of a cyber attack may also be covered.
Cyber Extortion Defense
The damage caused by global ransomware is predicted to exceed $5 billion, according to researcher Cybersecurity Ventures. Up from $325 million in 2015, the costs represent not just the amount of the ransom, but also the costs of downtime and lost productivity.
What is ransomware?
Ransomware is any type of malicious software that infects a computer and either prevents it from working as it should or prevents access to certain files until the user pays a ransom.
Typically, hackers behind the ransomware demand bitcoin – a type of digital currency that’s difficult for police to trace.
Cyber extortion from ransomware is a legitimate threat to all businesses – no matter the size. The best method to protect your business is to keep confidential information and important files securely backed up in a remote location that’s not connected to your main network.
As these types of attacks increase in frequency and severity, it’s critical that organizations like yours seek cyber liability insurance, which can help recoup losses related to cyber extortion.
Forensic and Legal Support
Following a cyber attack, your organization will have to investigate to determine the extent of the breach and what led to it.
The right policy can reimburse the insured for costs related to forensics and seeking out expert advice. Additionally, some policies can provide 24/7 support from cyber specialists, which is especially useful following a hack or data breach.
In addition, you may still need to seek legal assistance. This assistance can be costly. Cyber liability insurance can help businesses afford proper forensic and legal work following a cyber crime.
Coverage Beyond Your General Liability Policy
Your general liability policies don’t always protect you from losses related to data breaches.
What’s more, data is generally worth far more than physical assets, and it’s important to have the right protection in place when you need it most.
Supplementing your business insurance with cyber insurance coverage can provide you with peace of mind that, in the event of a cyber hack, your organization’s financial and reputational well-being is protected.
Ultimately, it’s your responsibility to protect your clients’ data. Failing to do so can result in a data breach, which could cost your company millions to billions of dollars.
By understanding your risks and securing the right insurance coverage, you are equipping your business to survive a cyber attack.
Ready to discuss cyber insurance for your business?
I’m Pat O’Neill, a Risk Advisor here at The O’Neill Group, an insurance and risk management firm in Northeast Ohio. I’d love to connect to discuss your cyber risk exposures and how a cyber insurance policy could benefit your business.
Call me at (330) 334-1561, email me at email@example.com or click here to schedule a meeting on my calendar at a time that’s convenient for you.
This article was adapted from Zywave. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.