Being the target of a cyber attack is no joke. The scary part is that any business could become a hostage of a skilled hacker, especially those that don't have cybersecurity protocols in place. What's more, when a data breach happens, businesses have no way of minimizing the damage unless they've invested in cybersecurity risk insurance.
It's easier to believe that a cyber attack won't happen to you, than preparing for one. However, that kind of thinking might be dangerous and detrimental to a business in the long run. Here are four reasons you need a cybersecurity risk insurance policy:
There are plenty of costs that could incur as a result of a cyber attack and the data breach that follows it. From potential lawsuits to recovering stolen funds, a data breach is a costly affair. There are both direct and indirect costs involved. While you’re waiting for forensics and data restoration, your business is losing productivity – and you’re paying for all of that. Having a cybersecurity risk insurance in place helps you cope with some of those unexpected expenses. Depending on your cyber insurance policy, breach coverage could help reduce the costs of a data breach significantly.
There are plenty of occurrences of cybercrime in which cyber insurance could protect you. One of the more common ones is ransomware and extortion, which often happens to small businesses. Most cybercrime will fall under unauthorized access and theft of privileged client or employee information or other confidential data. However, there’s also employee dishonesty and fiduciary misconduct, and those include property theft, misappropriation of funds and embezzlement. Cyber Insurance also protects you in the event of theft of Escrow, ERISA, IOLTA or trust funds through wire fraud, social engineering (usually phishing scams) and unauthorized transfers.
There is a gap in the coverage of an organization’s assets that general policies do not cover. In many cases, traditional insurance commercial liability covers the liability arising from “tangible” property, but not from the digital assets themselves. For a practical example, that would be the server is covered, as opposed to the stored data itself. That’s where cyber insurance comes in – since digital assets of an organization are what makes the business tick in most cases. Be careful, because you could still suffer full costs of a data loss event even if you do have traditional coverage.
In the lack of a risk management team dedicated to analyzing risks and setting protective procedures, cyber insurance can help cover you. In the case of storing or hosting data on the cloud, you’ll also be better protected. If your cloud provider had a breach, you’d still be held legally responsible for the business data that you stored, so treading carefully is essential. A cybersecurity risk insurance policy protects you from the worst.
In this day and age, any business could be compromised by merciless hackers. To protect your business’s digital assets, consider investing in a cybercrime insurance policy to reduce the cost of cyber attacks.
The Landy Agency is a national leader in providing non-medical, professional liability and cybercrime insurance for accountants, attorneys, and real estate professionals. John can be reached at 781‐292‐5417 or johnt@landy.com. Visit www.landy.com for more information.
If you are an insurance producer looking to register with us or obtain coverage for your client, please visit Partner Resource Center for information.