This blog was originally published on November 26, 2014. It was updated and re-published on May 16, 2018.
In this day and age, we can’t stress enough the importance of businesses purchasing Cyber Liability insurance. As we have written many times, all industry segments are affected by cyber threats – from healthcare and medical facilities to educational institutions, financial services and retailers among others. Moreover, large and small companies are equally vulnerable to cyber attacks and crimes.
While many companies are increasingly beefing up their cyber security measures and purchasing Cyber Liability insurance, others are taking the risk of going uninsured – or perhaps they mistakenly even believe they are covered. When speaking with your clients, share these top reasons why buying Cyber Liability insurance is a must.
If a business’ data was damaged or destroyed, a standard property policy would not cover data restoration and rectification. A Cyber policy provides comprehensive coverage for restoring data up to the policy limits. In 2018, data is everything. In 2017 alone, nearly 2 billion records were lost or stolen in data breaches, and the average cost of a breach in the United States was $225 per record breach. Remind your clients to think about how many records they keep stored digitally.
Insuring Against Losses
A data breach comes with many associated costs. In addition to the loss of whatever is destroyed or taken, businesses will also need to consider the cost of repairing their business, profit losses as a result of a shutdown, notification costs, and the loss of clients old and new.
If a system was hacked or a computer virus caused it to go down preventing a company from conducting their core business, a business interruption policy would not respond. Cyber insurance can be designed to provide coverage for loss of profits associated with a systems outage caused by a “non-physical peril” such as computer virus or denial of service attack.
States throughout the country have enacted breach notification laws, some more stringent than others. These laws require businesses that lose sensitive personal data to provide written notification to those individuals potentially affected. This can be quite costly. Cyber policies provide coverage the costs associated with providing a breach notice.
When systems have been compromised, businesses run the risk of losing the trust of their customers, which can cause more harm to a company than the immediate loss. Cyber insurance can help pay for the cost of a crisis management or PR firm to help restore one’s reputation.
iPads and smartphones have made our lives a lot of easier, but they also come with additional risks, as important and confidential data can be stolen or lost much more easily. What’s more, these devices are being targeted with a growing number of viruses being built specifically for them. Cyber insurance can help cover the costs associated with a data breach should a portable device be stolen, lost or fall victim to a virus.
These are only several top reasons why commercial insureds should be purchasing Cyber coverage. If a breach occurs, they also need this coverage to pay for legal and forensic services to determine whether a breach occurred and assist with regulatory compliance if a breach is verified. They will also have the expense of customer credit monitoring, as well as monitoring of fraud, public records, and other information as needed. In addition, if sued by a third party, Cyber Liability will provide coverage for judgments, civil awards, or settlements a business is legally obligated to pay after a data breach.
Caitlin Morgan provides Cyber Liability insurance to all types of businesses and can design coverage to meet your client’s specific exposures. Please give us a call at 317.575.4440 to find out how we can help you put together a Cyber program.