Here are 3 types of cyber insurance every business should have.
By Mitchell Sharp
Data Breaches are no longer just a problem for big business. Any business that stores any type of information or process payments electronically is at risk to hackers. Two of the largest data breaches in history were started by hackers first gaining access to a small business who was a vendor partner of the larger business that was ultimately hacked. In these cases the large business that were hacked were Target and Home Depot. The small businesses that were first hacked were an HVAC contractor who worked on the air conditioning units for a number of Target locations throughout the Pittsburgh area. The other was a business that provided credit and debit card services at the self-checkout lanes to several Home Depot Locations. Both of these small businesses had been compromised for months without knowing. Once the hackers realized they had access to the internal systems of the larger company, that is when damage was done. Had these businesses not had proper insurance coverage they would no longer be in business. Cyber insurance is a new and developing part of the insurance industry. Here are the three main coverages every business should consider when speaking with their trusted insurance agent.
Cyber Liability Insurance
Cyber Liability Insurance policy covers your business for liability to outside third parties not directly associated with your business. This can include customers, vendors or anyone who is harmed by your business as a result of a data breach that occurs to your business. Each carrier and each policy is different, but this coverage typically covers a variety of expenses associated with a data breach. The expenses can include notification costs, credit monitoring, costs to defend claims by state regulators, fines, penalties, and loss resulting from identity theft. The laws regarding data breaches is different in each state, but most states require a compromised business to hire a forensic expert to find the source of the breach and fix it. They must also notify all impacted customers and provide credit monitoring services for one year. According to the Ponemon Institute, a leading independent think tank, the cost of a data breach is $145 per record stolen as of 2015.
Data Breach Insurance
A Data Breach Insurance Policy covers your business for the first party damages to you and your business. This can include hiring a public relations firm to repair the damaged image of your business. It could also include those things required by law for you to provide as a result of a data breach. Each state has their own requirements, but most have a minimum requirement of hiring a forensic expert to determine the source of the breach and fix it as well as providing credit monitoring services for one year to anyone damaged by the breach.
Technology Errors and Omissions Insurance
Technology Errors and Omissions Insurance is the one type of cyber coverage that may not be necessary for all businesses. That being said, all businesses should consult with a trusted insurance professional before making the decision to not secure Technology Errors and Omissions Insurance. This coverage is designed specifically for businesses who sell technology products and perform services on technologically advanced products. A great example of a need for this coverage is a data storage company or a company who manufactures computer software. This coverage provides protection from losses resulting from technology services and products, media content or network security breaches. You do not necessarily need to be a highly advanced technology company to have a need for Technology Errors and Omissions Insurance.
Threats in the cyber realm are bigger now than at any time in history. Every business is at risk in some form or fashion. When it comes to insuring your business properly from cyber threats it is no longer a question of if you need coverage, but more a question of which policies and how many does your business need. Partnering with a trusted independent insurance agent is always the best way to find the most complete coverage and get it at the best rate possible. Cyber Liability and Data Breach coverage are needed by most businesses who store information about their customers or process payments electronically. Technology errors and omissions coverage may be needed if you sell or service technology products. No matter what industry you operate in Cyber Insurance should be a part of your overall risk management strategy.
Mitchell Sharp is a Marketing Associate for General Liability Shop. Mitchell has expertise in workers’ compensation and cyber liability insurance. He has a passion for using his knowledge of commercial insurance and digital marketing to benefit the small business community. @GenLiabShop.