Throughout the COVID-19 pandemic, the tech industry not only proved resilient but also thrived in many sectors. The United States is the largest tech market in the world, making up 33% of the entire global market.
Despite tech companies’ in-depth knowledge of IT and cyber systems, they’ve become lucrative targets for cyber criminals. Cyber Insurance for technology companies has never been more important, for the tech companies themselves and the many industries they support.
Why do Tech Companies Need Cyber Insurance Coverage?
When we think of tech companies, we tend to think about Google, Facebook, or Microsoft.
However, small- to mid-sized tech companies employ thousands of people and support industries of all sizes, from online ticket sales to project management software. These companies gather user data to conduct their business, making them extremely susceptible to cyber attacks.
So what is Cyber Liability Insurance and how does it affect tech companies?
A Cyber Insurance policy provides coverage for both first- and third-party risks associated with a cyber attack. These risks generally aren’t covered through a Commercial General Liability (CGL) policy, an Errors & Omissions (E&O) policy, or other business insurance products.
When a tech company suffers a data breach, they’re left to clean up the damages to their own digital assets while protecting the numerous customers and clients also exposed. These damages can cost hundreds of thousands, if not millions, of dollars. Without cyber coverage, these attacks can cost enough to force a business to fold.
3 Reasons Tech is So Susceptible to Cyber Attacks
Are you still asking your clients, “Does your company need Cyber Liability Insurance?”
We don’t need to know the ins and outs of your tech clients’ businesses to confirm they need Cyber Insurance. Today, every industry is at risk. Tech industries are no different.
Tech companies are highly susceptible to cyber risks for a number of reasons:
- They often collect and store user data.
Whether through an e-commerce website, project management software, or an app connecting users with a local contractor, these services rely on collecting personally identifiable information (PII). This fact makes them lucrative targets for hackers.
- They often rely on remote desktop protocol (RDP).
Many tech companies were ahead of the game and allowed employees to work remotely prior to the pandemic. While RDP can be secure, if it’s not properly set up and consistently updated or patched, it can lead to vulnerabilities hackers will quickly exploit.
- They often provide fundamental services to their clients.
Tech companies may have thousands of clients relying on their services to conduct their own businesses. Should the tech company suffer a breach, their clients may be unable to use the products for which they’ve contracted, such as their e-commerce website, an app that routes delivery drivers, or a computer system. The third-party business interruption costs could prove significant.
What Does Cyber Liability Insurance Cover?
At ProWriters, we provide broad, comprehensive Cyber Insurance coverage for business owners against a number of cyber-related risks and damages.
- IT forensic costs
- Notification and credit protection costs
- Crisis management costs
- Crime and social engineering costs
- Cyber extortion
- Business interruption
- Hacker damage or digital asset damage
Liability claims related to:
- Breach of contract
- Negligent protection of data
- Network security breaches
- Transmission of software viruses
- Denial-of-service attacks
- Defense of regulatory actions related to a breach
- PCI fines and penalties
Risk Management Services
- Managed detection and response services (MDR) and 24/7 real-time cyber incident response (IR) through Pondurance.
- Breach coach to help walk business owners through the process of responding to a cyber attack.
- Continuing education for employees to increase cyber security and prevent future attacks.
Protecting Tech Clients: Creating a Comprehensive Risk Management Plan
While it has become a necessity for any of your tech clients, from large corporations to small businesses, Cyber Insurance for technology companies is only one part of a comprehensive risk management plan.
The tech industry is one of today’s most innovative industries. This quick growth and development can often lead to glitches or crashes as companies quickly implement new products. Many business owners mistakenly confuse Cyber Insurance with Tech E&O, thinking they only need one of these two coverages. But without both of these insurance products, your clients will be facing significant risks.
A Tech E&O policy protects your clients from potential third-party claims related to professional errors or omissions.
For more information on a Tech E&O policy, download our FREE eBook, E&O Insurance for Tech Companies: Understanding Client Risk & E&O Coverage.