Often, I get asked if an errors and omissions or general liability policy provides crime or cyber protection. Some policies may offer a small supplemental coverage for a network breach, commonly $15-$50,000 of protection. These supplemental coverages are limited not only in monetary protection, but also in what is covered. They exist to provide a degree of coverage for initial notification costs or to secure data. They are not meant to replace the broader coverages contained in fraud, embezzlement, breach or cybercrime policies.
Crime and Cyber represent two distinct areas of risk for businesses. Crime insurance programs are designed to protect businesses from employee dishonesty, fraud, forgery, fund transfers, property theft, and embezzlement.
The percentage of employees who have admitted to stealing, at least once from their employer – 75%
But that is not all - there is also the added threat from Cyber attacks, ransomeware, phishing, spamming, spoofing, social engineering and data breaches. Many of these malicious efforts are attempts at stealing private customer data, passwords, credit card information and social security numbers. Then, private information can be sold to criminals wishing to establish fraudulant identities, draw money from unsuspecting accounts or influence election results.
Much information exists for businesses to learn about computer and data security methods to minimize the chances of an incident, but with even the best protections, the bad guys will still invade tens of thousands of businesses and capture their data. A single data breach can result in civil fines, notification requirements and credit monitoring costs, computer forensics and restoration and lawsuits - totaling tens or even hundreds of thousands of dollars. Can your business absorb that cost?
Cybercrime damages exceeded $3 trillion in 2015 and will reach $6 trillion dollars by 2021 - over half of cybercrime is related to human error.
We have identified two distinctive categories of business crime risk - money and data. What can you do to better protect your business? Some insurers offer a “build your own’ policy that can incorporate elements from the above examples; others may offer stand-alone options. There is not necessarily an inherent advantage to either approach, it is more important to obtain the full breadth of coverage your business needs, whether it is with one policy or two.
Crime Insurance protects against physical property loss, such as money, products, employee theft and embezzlement. You must have three or more employees to qualify for this coverage.
Cybercrime Insurance protects against electronic or digital losses of data, customer information, account data, electronic funds transfers, and stored private information as well as provides an allowance for restitution to those parties effected by that loss.
John Torvi is the Vice President of Marketing & Sales at the Herbert H. Landy Insurance Agency of Needham, MA. John has been in the insurance industry, focusing on the needs of business owners, for over 27 years. He holds a Bachelors Degree from Providence College and a Masters Degree from Springfield College and is a frequent speaker and contributor to professional journals and conferences for the legal, accounting, real estate and insurance industries.
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.
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