Have You Fully Assessed Your Cyber Liability Risk?

When small business owners review the questions they have before they buy business insurance, they frequently don’t consider the cyber liability threat. In fact, many pay little attention to potential cyber-attacks and don’t buy cyber liability insurance. Why? Maybe it’s a feeling that most businesses are too small or insulated to be of any interest to hackers. Maybe some think that it’s already covered by their existing business insurance.

Whatever the reason, many business owners are more concerned with the more passive form of cyber attacks, like viruses that ruin your systems or corrupt data.

The reality is that cyber-attacks are real, they’re often aggressive, and present a legitimate risk to your business. While we are often surprised at what is covered on a business insurance policy, cyber liability is a specific risk with specific coverage. It’s not generally found in other coverages. It’s time to add cyber liability insurance to your small business insurance checklist.

If they can get to the big guys

In 2015 we witnessed several large businesses with excellent security protocols get victimized by cyber-attacks. Good companies like Primera Blue Cross, Anthem, Sony Pictures, Target, JP Morgan Chase, Home Depot, and Staples just to name a few.

In total, the cyber-attacks against these companies placed at risk over 240 million credit records, credit card data files, and household/personal information.

Cybercriminals are sophisticated. They have the tools and resources to perpetrate large-scale attacks and can wreak havoc on your customer data.

Think about your cyber liability risk

As a business owner or risk manager, it’s time to begin paying more serious consideration to your cyber liability. It’s not good enough to just invest in the best IT hardware and security software, you need to get the proper protection for when those safeguards fail.

Regardless of business size, many companies report that they suffer at least one significant cyber-attack incident annually. Business owners also share that they have been victimized by computer-related vandalism (including denial of service attacks where operations are jammed).

These attacks go beyond mere frustration, more often than not, these problems tend to trigger significant financial losses.

Even when the attempts are unsuccessful, the financial and human resource costs associated with handling these and other cyber liability risks are staggering.

What type of businesses are most at risk?

Most security breaches have involved attempts by cyber criminals to acquire sensitive company information, usually concerning their customers or clients. Businesses and entities that are popular targets include:

• Financial Institutions
• Hospitals
• Retailers
• Transportation Services
• Information Services
• Food Services
• Manufacturers
• Professional Services
• Universities

If you find yourself in doing business in one of these classes, you may be a greater target, so there is much more reason to take great care in your technology and protection.

But if you don’t find your business class above, don’t think you’re free from risk, all businesses need to take cyber-attacks and cyber liability seriously.

There is an insurance solution

In recent years the insurance market has evolved to address cyber-related risks, and now we have specific cyber liability insurance coverage. This has become necessary because traditional property and liability coverage was not designed in a meaningful way to address the new technologies and cyber risks.

Cyber liability policies generally provide two types of coverage that may not be available in conventional business insurance policies. One form of coverage is designed to protect businesses against damage caused to their customers when data security is compromised. A second type of coverage is for tech companies who face lawsuits from clients who claim damages for the products they purchased from software and hardware providers. You guessed it, this type of coverage is for things like flawed security software.

Typically, cyber liability insurance is designed to cover harm due to unauthorized access, the introduction of viruses, and generally any activities involving business use of the internet.

The bottom line

If you’re shopping for business insurance, or scheduled a coverage review with your insurance agent, the emerging business risk from cyber-attacks and social media liability should be discussed.

You’ll want to know if your business needs cyber liability insurance, and what is the breadth of your online activities, and exposure. If your business operations extend beyond our domestic borders, coverage should consider the need for international protection.

Cyber liability risk is complex and dynamic, and the costs to your business, if you fall victim to a cyber-attack, can be significant. Make sure you’re prepared for all the potential pitfalls. If you need to speak with an agent, contact us. You can also start a cyber liability quote online.

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