Today, technology continues to develop at warp speed and our reliance grows stronger in ways we never could have imagined. With smart refrigerators, driverless cars, and mirrors that double as workout instructors, nearly everything we use now is “smart.” While these gadgets offer unsurpassed convenience, they also come with new and increasing cyber security threats.
There are now endless avenues for cyber hackers to explore and exploit. As time goes on, these attacks continue to grow in severity and sophistication. Today, every industry is at risk of a cyber attack and cyber insurance coverage has become a fundamental piece of every organization’s risk management plan.
What Does a Cyber Insurance Policy Cover?
Cyber Insurance coverage has drastically evolved from its early days to the current products available, which provide broad, comprehensive coverage to clients. Small shops to large corporations with more than one million customers should now have a cyber policy within their portfolio.
Understanding what this type of insurance covers helps to demonstrate just how broad the damages of a security failure or data breach can go.
Cyber coverages may include:
First-Party Coverage
- IT Forensic Costs
The costs to determine what information or computer system was breached or accessed improperly. - Notification Costs
The costs to notify all customers, businesses, and regulators of the breach of sensitive information and potentially run a call center addressing the same. - Credit Protection Costs
The costs to provide credit monitoring services to all affected parties. - Crisis Management Costs
The costs to hire a public relations firm to handle reporting the breach to the public along with their response. - Crime and Social Engineering
The costs of the potential involuntary parting of funds due to social engineering attacks.
Third-Party Coverage
- Costs related to a breach of Personally Identifiable Information (PII)
- Credit card numbers
- Social security numbers
- Bank account information
- Personal health information
- Sensitive corporate information
- 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
- PCI fines and penalties or assessments
Additional Coverages
- Multimedia Coverage
The costs of online advertising, intellectual property, copyright and trademark infringement, and libel or defamation claims. - Cyber Extortion
The costs to cover potential ransom demands associated with a ransomware attack. - Cyber Business Interruption
The costs associated with business interruption should a server, a third-party host, or critical software go down. - Hacker Damage or Digital Asset Damage
The cost to rebuild a damaged website, intranet, network, or electronically-held date.
Do We Need Cyber Insurance? If Your Clients Are Still Asking, They Could Be Too Late
Today, business owners are forced to both open themselves up to cyber risk while also actively working to protect themselves from cyber risk.
While a company could certainly choose to avoid cyber risk altogether and operate completely “off the grid,” they would likely not reach many patrons without digital advertising, lose customers while accepting cash only, and hurt their bottom line using inefficient manual workflows.
Any company that wants to thrive in today’s environment is forced to connect to the digital matrix, and in doing so, open itself up to potential threats. While strong cyber-security efforts can significantly reduce the risk of security incidents and exposure, cyber threats have become so invasive and common, that the likelihood of falling victim is too high to continue uninsured.
Even with highly-publicized data breaches year after year, many organizations, especially small businesses, are still walking a dangerously thin line without cyber insurance coverage.
There are a number of alarming misconceptions about this coverage that should be addressed:
1. Cyber Insurance Doesn’t Provide Much Coverage
While this once may have been true (many years ago), the cyber insurance products available today provide broad coverage that can be tailored to fit clients’ specific needs.
2. Our Organization Isn’t a Target for Cyber Crime
This is a common belief of small business owners and it couldn’t be more false. While we only hear about the enormous data breaches that large corporations face in the media, these attacks are extremely complex and time-consuming. In reality, the average hacker is looking for easy, quick targets, like small businesses.
3. Cyber Insurance is Too Expensive
The premium for a cyber policy is a small price to pay in comparison to the rising financial damages that a company faces following a breach (it can regularly force small businesses to fold).
Every business and organization should take a realistic and proactive look at their cyber-security posture now to ensure they’re prepared for the day they become the next victim.
Additional Coverages Available to Your Clients
While Cyber Insurance coverage is a necessity, it’s important that your clients have a well-rounded risk management plan. Now that your clients are familiar with the broad coverages offered within a cyber policy, it’s equally important that they recognize what is not covered by Cyber Insurance.
These additional policies provide important coverage for risk that your clients may face that will not be included under their Cyber Insurance coverage:
- Errors & Omissions
This coverage provides the insured with protection against mistakes, oversights, errors, or negligent actions by their company or workers. This is especially important for tech clients. - Directors & Officers Insurance
This type of policy provides protection for the organization’s directors and officers, specifically, should a claim or lawsuit be made against them personally.
Every organization’s exposure and risk appetite is different, which is why it’s so important to identify each client’s individual risk exposure and need for coverage.
Prepare Your Clients With ProWriters
Do you still have clients asking, “What is cyber risk insurance?” It’s time to bring them up to speed.
With our FREE downloadable infographic, Cyber Risk Management 101, we’ll help you break down your clients’ cyber risk and need for protection in five, simple steps.
Still have questions? Contact a ProWriters expert today.
