All businesses are potential targets of cyber attacks, whether they realize it or not. Small businesses and major corporations, including banks, retail companies, medical corporations, and even government entities have experienced data breaches in recent years, with costs soaring into the millions.
And the prevalence of cyber attacks only appears to be increasing. Now more than ever, businesses need to protect themselves from the impact of these attacks with a cyber liability insurance policy.
If your clients ask, “What is cyber insurance?” the chances are that they are not protected against the risks facing their company’s finances, productivity, reputation, and more. Many business owners still aren’t covered because they aren’t aware they’re at risk.
Your business clients need protection — but do you have the tools to help them? ProWriters can help you get your clients the protection they need, and that starts with helping you explain cyber insurance, what it offers, and why it’s so critical.
What is Cyber Insurance? What it Covers and Why It’s Necessary
Cyber security is one of the top global threats individuals and businesses face. As technology becomes increasingly integral to everyday life, everyone faces an increased risk of a security breach.
Cyber attacks are predicted to increase, continue to evolve rapidly, and cause more severe damage as we move further into the digital age.
Some of the latest cyber threats include:
- Ransomware. This attack comes from a “type of malicious software, or malware, designed to deny access to a computer system or data until a ransom is paid.”
- Phishing. These attacks are the most common form of social engineering attacks and involve a hacker who tricks an internet user into providing private or personal information that can be utilized to access networks, accounts, databases, and more.
- Deep Fakes. These attacks manipulate videos to produce false content that trick viewers into thinking they are real.
- Cloud-Based Attacks. With more organizations using cloud-based storage for data, millions are at risk should these systems face an attack.
- Denial of Service Attacks (DoS). These attacks involve a hacker flooding a network with traffic until it can no longer respond or crashes, leaving legitimate users unable to access the network or device.
These are just some of the current threats to enterprise security. As cyber criminals become increasingly sophisticated, the threat landscape evolves constantly. Your clients must prepare themselves to take on these new threats.
The Potential Damages
Hiscox reports that the average annual cost of cyber attacks on a small business is $25,000, and the costs can soar into the hundreds of thousands or even millions of dollars for a major company. In either case, the costs associated with a cyber attack can be devastating: The National Cyber Security Alliance estimates that 60% of small and medium-sized attacked companies file for bankruptcy within six months.
One driving force behind these bankruptcies is that many business owners don’t understand how much a cyber event or data breach can cost. They fail to adequately protect the business, leading to devastating financial consequences.
Consider this cyber claim example to help explain how a cyber liability policy can provide the protection your clients need.
Scenario: A law firm is contacted by a hacker who demands $25,000 within 96 hours and threatens to delete all the company’s data and release private client information. They are completely locked out of their systems.
Option #1: The Firm Does NOT Carry a Cyber Liability Policy
Because the firm does NOT have a cyber insurance policy, they are forced to pay the $25,000 ransom fee. They also needed to outsource work on current cases to another law firm while they recovered their system and pay employees overtime to recreate work that was inaccessible during the lockdown.
In addition to extra productivity costs, the law firm had to hire a forensic IT firm (on their dime) to investigate the source of the breach and determine what and how much information had been compromised. The firm privately notified affected individuals, which violated payment card industry (PCI) regulations. This meant additional fines and a requirement to purchase credit monitoring services for their clients.
Unfortunately, the financial consequences of the data breach were too severe for the small firm to sustain, and it was forced to close.
Option #2: The Firm DOES Carry a Cyber Liability Policy
Because the firm has a cyber liability policy, it immediately contacted its insurer as soon as the breach was detected. The insurer assigned a breach coach to assist with the recovery.
The cyber insurance policy pays the ransom and provides an IT forensics team to investigate the breach. The policy also covers the costs of hiring temporary help while the systems are brought back online. The firm also has access to an experienced public relations team, which prevents PCI fines by following the proper notification process.
Instead of losing its reputation and facing bankruptcy, the law firm resumed normal operations within a few days of the data breach. The cyber insurance policy covered most of the costs, with the only out-of-pocket expenses the policy deductible.
Clearly, in this scenario, cyber liability insurance made all the difference. But what exactly does a policy cover?
What Does Cyber Insurance Cover?
ProWriters makes it possible to provide cyber liability coverage for companies of all sizes. Depending on the company’s needs and the specific policy, cyber insurance offers several protections, including:
- IT Forensics, or costs to investigate the breach.
- Notification Costs for alerting affected parties of the breach.
- Credit Protection Costs to provide credit monitoring services to the affected parties.
- Crisis Management Costs, including the costs of hiring a public relations firm to help manage the public response to the breach and manage the business’s reputation
- Crime & Social Engineering covers losses when a stolen username and password are used to steal funds from an account.
- Costs related to a breach of Personally Identifiable Information (PII), including:
- 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 and possible fines/penalties
- PCI fines and penalties and assessments
- Multi-Media Coverage
- Online advertising
- Intellectual property
- Copyright and trademark infringement
- Libel or defamation claims
- Cyber Extortion, or ransomware coverage for potential ransomware demands during an extortion
- Cyber Business Interruption protects businesses that rely heavily on their network or the internet for their revenue. This may also include dependent business interruption, should a third-party they work with closely go down.
- Hack Damage or Digital Asset Damage: Coverage for the cost to rebuild your clients’:
- Electronically-held data
Get Protected With ProWriters
If you have clients who use technology, they cannot afford to ask, “What is cyber insurance?” If they don’t have cyber coverage or don’t know what it is, they are at serious risk of financial loss due to a cyber event.
To learn more about how to protect your clients best, download our FREE eBook, Cyber Exposure: What’s the Real Cost? The guide is packed with information and more examples of what can happen when businesses aren’t protected by cyber insurance.
And to get started giving your clients better peace of mind, contact us or call a ProWriters expert today at (484) 321-2335.