Our everyday lives are becoming more and more reliant on technology. We have robotic vacuums, speakers that can tell us the weather, and video chat systems for our pets. As technology constantly evolves, unfortunately, so do cyber hackers. While cyber security is a fairly new and quickly advancing product, it has also become an absolute necessity for any business. As we break down this coverage, types of claims, and cyber risk insurance claims examples, business owners can learn about the best possible policy that protects their organization.
Cyber insurance coverage can be complex and difficult to understand. When a cyber attack occurs, many business owners struggle to understand their coverage after the breach. In recent cases, we’ve seen clients file complaints against their brokers for failing to place the proper coverage, and retailers file complaints against wholesalers for the same reason. Most business owners are not familiar with potential cyber attack insurance claims as they are with claims for auto accidents or homeowner’s insurance.
This is why it’s so important that business owners engage with the right expert to help them find the policy that will best protect their organization.
Coverage When You Need It: Claims Examples
Cyber liability insurance can protect you from a number of first-party, third-party and additional costs that you can face following a cyber attack.
- IT Forensic Costs: To determine what information may have been breached and how it was breached.
- Notification Costs: To notify all individuals and businesses affected and potentially run a call center.
- Credit Protection Costs: To provide credit monitoring services to all parties affected.
- Crisis Management Costs: For media relations, including a possible public relations firm.
- Costs related to the breach of Personally Identifiable Information (PII), such as credit card numbers, social security numbers, bank account information, personal health information, and sensitive corporate information.
- Costs related to third-party claims, including breach of contract, negligent protection of data, network security breaches, the transmission of software viruses, and PCI fines and penalties.
- Cyber Extortion
- Cyber Business Interruption
- Digital Asset Damage
While third-party claims can be extremely costly, most expenses fall under first-party claims, which can be broken down into three broad categories:
- Theft of Funds: This is a straightforward electronic theft of funds from a company’s bank account.
- Theft of Data: Since data is now valuable, it is worth stealing. Identity theft has reached record levels worldwide.
- Damage to Digital Assets: As businesses greatly depend on their digital systems to operate, cyber criminals now either damage or threaten to damage an organization’s digital assets.
Many small businesses don’t realize the impact that cyber threats can have on their organizations until those threats gain access and it’s too late. In many cases, business owners don’t know what will be covered by their insurance policy until after the claim is made.
Here are some cyber risk insurance claims examples to help you better understand how a cyber liability policy comes into effect in the event of a cyber attack:
A financial controller of a law firm got a phone call from the firm’s reported banker. The banker advised that some suspicious wire transfers had been flagged and he needed the password and pin so he could freeze the firm’s account. The financial controller gave him this information and was told that the freeze was successfully applied. The next day, however, the financial controller contacted the bank who had no record of the prior conversation and over $100,000 had been transferred to overseas accounts. No reimbursement was offered by the bank as these were authorized transactions.
Thankfully, the law firm had a cyber insurance policy with cyber crime coverage for social engineering, and they were able to recover their funds, less their policy deductible.
A private healthcare clinic was the victim of a ransomware attack in which their patients’ information was stolen and the hackers demanded $13,220 in Bitcoin. The healthcare clinic’s IT team was in need of additional support, so they contacted their cyber insurers. The insurer’s in-house incident response team was able to support the IT team and correct the vulnerability. They identified the data that had been stolen and realized it was limited. As such, they did not pay the ransom and a crisis communications consultant helped them notify all affected patients.
Ultimately, they heard nothing from the hackers and their insurance policy covered the cost of the IT forensics company ($13,220) and the crisis communications company ($6,610), less their policy deductible.
Get the Right Policy With ProWriters
Since cyber insurance is complex, it’s important that you speak with an expert that has access to as many markets as possible, and can walk you and your clients through all available coverages.
Make sure your organization is protected with the right cyber insurance liability policy. Contact us or talk to a ProWriters expert today at (484) 321-2335 to learn more.