Reasons Why Cyber Liability Insurance Is Vital to a Business

Any company can become the victim of a data breach. From an individual’s personal details to the corporate documents required to run a business, there’s no shortage of sensitive information that is at risk of being lost or stolen. Following are the reasons why businesses should consider cyber liability insurance in PA.

No Business Is Immune

Since 2013, billions of records have been lost or stolen. Over 1.9 million are compromised every day, and this is not restricted to larger companies. Even the smallest of organizations are at risk. Unfortunately, the costs of a data breach could be exorbitant and detrimental to a business.

Breaches Are Expensive

Of course, not every situation plays out the same; however, the average total cost of a breach is $4 million and that number continues to rise. There are many ways an unauthorized disclosure can empty a company’s pockets, including:

  • Notification costs
  • Damages and legal expenses resulting from a lawsuit
  • Fines imposed by the Payment Card Industry or HIPAA privacy laws
  • Forensic investigation expenses
  • A network shutdown
  • Cybercriminal extortion demands

Breaches Are Out of Your Control

A strong IT department and secure network are helpful; however, even the most prepared business can’t prevent a violation from happening. Cybercriminals evolve with security technology. Also, simple mistakes such as lost laptops and un-shredded documents open a company up to significant financial loss.

A data breach may be unavoidable, but a business armed with robust cyber liability insurance in PA can mitigate a difficult aftermath.

The Hidden Costs of a Cyber Attack

Being hacked is every company’s worst nightmare. You can lose thousands, if not hundreds of thousands, if hackers get their hands on your account access information. However, the immediate loss of funds is just one side of the coin. Without a comprehensive cyber security insurance policy, you are likely to accrue a slew of hidden secondary costs.

Loss of Revenue

Dealing with a security breach is often a long and drawn-out ordeal, during which you are likely to lose valuable revenue. Your regular business processes may be slowed down or completely interrupted due to:

  • Internal systems malfunctions
  • Equipment failure
  • Electronic communication failure
  • Reputation repair via communication to clients
  • Content repair

Not to mention any direct financial theft that may have occurred. These secondary costs can cripple a business, especially an SMB. Fortunately, these kinds of losses are commonly covered under the first-party insurance coverage included in most cyber security insurance policies.

Legal Liability

Repairing your relationships with clients can be an uphill battle after the loss of confidence they experience hearing that their private information was accessed during a cyber hack. Some may even choose to pursue legal action, which can cost your company big in settlements, payouts and civil awards. To protect yourself against this, you should consider including third-party coverage in your insurance policy.

If you total up these potential costs, the sum can be staggering. That’s why it is crucial to understand your company’s risks and research the various cyber security insurance options available.

 

How to Know When Your Financial Data Is Insured

If you’re a business owner or someone who is highly involved in management, you bear the responsibility of insuring your company against various liabilities. Today, business owners are purchasing both general liability and cyber liability insurance in PA. To understand why both insurance policies are necessary, its important to break down what each type of insurance will cover.

Tangible Coverage

Many general liability policies will specify that they cover tangible damages. This kind of coverage pays for costs from damages that are material and easily visible. Examples include when an employee working for you accidentally damages someones property, or someone suffers bodily harm on the property of your company.

Intangible Coverage

What is not tangible are facts and information. Although stored within computers, they cannot be touched or moved by the human hand. This also includes computer programs or software. Cyber liability coverage was developed to cover this insurance gap. Today, cyber liability insurance in PA will cover damages resulting from data destruction, theft of personal data such as credit card or Social Security accounts, or accidental transmission of computer viruses to another party.

Cover Both Tangible and Intangible Damages

When discussing a policy with an insurer, be sure to ask about cyber liability insurance in PA in addition to general liability policies. With the growing risk from hackers and identity thieves, make sure all your bases are covered so no unexpected insurance gaps expose your business to possible ruin.

 

3 Ways to Reduce Your Companys Cyber Risk

Virtually every company today faces cyber risk. Hackers can take your customers information with ease, and then you have to allocate resources to dealing with the aftermath. Although a comprehensive insurance policy should be acquired in case this ever happens, there are other things your business can do to reduce the risk.

1. Have Strong Passwords

This is one of the most basic things your computer systems should have. You have likely heard about company’s accounts getting hacked because the password is Password or 12345678. Have something that is difficult to guess.

2. Only Give Access to People Who Need It

Many hacks occur internally. Whenever you give out a password or access to a certain system, make sure the employee can be trusted. You also need to consider if the employee absolutely needs to have access.

3. Have an Expert Look at Your System

You can hire someone to take a look at your security system. They can locate weaknesses and recommend improvements you can make. It might cost money to upgrade a system, but it is much better to do this than deal with costs associated with a data breach.

A few easy steps can make all the difference in how protected your company is. Remain vigilant and take essential actions to reduce your company’s cyber risk.

 

The Importance of Electronic Data Processing

Electronic data processing, sometimes referred to as automatic data processing insurance, is becoming a more and more important policy for businesses to have. This coverage protects computers, data storage devices and the data itself. Most businesses use computers and storage devices and have data. Why is EDP so important for today’s businesses?

Businesses Rely on Computers

Not only do businesses use computers, but many even rely on them. Computers are used as a communication device and a way to keep track of purchases and sales. Customers may send their requests and personal information through computers. Because of this dependence, companies need to make sure their computers, data storage devices and data are covered.

Computers Are an Investment

In order for your business to get the computers it needs, you likely had to spend quite a bit of money. Why risk this financial investment by not protecting your data processing devices? Automatic data processing insurance can help protect the equipment you rely on most.

Coverage May Be Incomplete Without It

If your business does use computers, your typical business insurance may not be complete without EDP. You need to protect every aspect of your company if you want to have peace of mind. Talk with your insurance agent to learn how automatic data processing insurance can make your coverage more complete. He or she will also be able to help you better understand the importance of this policy.

Cyber Insurance and the Continuing Threat of Attacks

Cyber attacks continue to make the news, but more importantly, they are a growing concern and a growing cost to many companies in the US and abroad. Cyber crimes have caused a rise in the sale of cyber insurance due to the escalating frequency of attacks that have even posed a growing threat to our national security from attacks within and outside of the country.

The continued occurrence of serious data breaches, including the Sony Pictures hack that resulted in the canceled theatrical release of “The Interview“, a satirical film about North Korean leader Kim Jong-un, and the Home Depot, Staples, and Target data thefts, impacting hundreds of millions of consumers and several financial institutions, has certainly brought to the forefront the many complex issues of cyber security and the protection of sensitive personal information.

Because of the many high-profile cyber incidents that occurred in 2014 agencies have seen even more of a demand to provide their clients with options on coverage to help pay the costs of these expensive breaches for everything from point-of- sale (POS) breaches against customer accounts to targeted denial-of-service attacks intended to disable a company’s network and cause wide-spread panic.

Most companies turning to cyber solutions to help pay costs

Insureds sought financial protection through insurance in larger numbers, due in part to the attacks against major companies. Meanwhile many smaller businesses were overwhelmed by cyber theft occurrences in medical offices, retail sales divisions, and a host of other outlets. In 2014 alone, the number of U.S.-based Marsh clients purchasing standalone cyber insurance increased 32 percent over 2013, according to the report Benchmarking Trends: As Cyber Concerns Broaden, Insurance Purchases Rise, by Marsh USA.

Most of these large breaches drew attention for their effect of raising the level of attention given to cyber risks within companies, and for spurring changes to payment card systems in the U.S. and beyond. Along with any disruption resulting from cyber crimes and the ensuing reputational damage, many companies experiencing a data breach could also find itself attracting the unwanted attention of regulators, including the Federal Trade Commission.

Insurers responded to this demand by offering broader cyber insurance coverage in 2014, including coverage for contingent business interruption (CBI) and cyber-induced bodily injury and property damages and this trend has continued throughout the first quarter of 2015.

Why Insure Against Cyber Exposures

Cyber exposure has fast become a major risk for companies big and small. Many business professionals today rely heavily on technology to help manage their company’s operations and infrastructure, as well as to store their valuable data. The downside of all of this technology, while improving a company’s efficiency and ease of doing business, is that it leaves these companies vulnerable to cyber liability exposures. Cyber Security and Privacy Liability coverage are two examples of ways to protect policyholders against many third party cyber liability exposures.

Three of the main cyber threats and their consequences

1. Network Security Liability

This is a third party liability risk associated with the unauthorized access, theft or destruction of data within the insured’s computer network or other electronic information system. It can include denial of service attacks, virus transmissions and electronic security breaches. It could be due to an internal or external attack, and may also include liability claims arising out of the theft of mobile computer equipment, such as laptops, in order to appropriate data illegally.

2. Privacy Liability

This liability risk is associated with theft of non-public personal information in electronic form and liabilities involving the failure to comply with privacy laws, or those regulations that govern the control, collection, access, transmission, use and accuracy of that information. There are severe costs associated with claims or losses, such as notification of affected parties of the breach, as well as fines and penalties for permitting such a breach.

3. Electronic Media Liability

This risk is associated with the display of electronic content on a client’s website. Any information in the form of words, sounds, numbers, images or graphics in electronic form is considered electronic content, and also includes advertising, video, blogs, bulletin boards and chat rooms.

In addition to potential third-party liability damages, clients could face additional risks for direct costs from any number of sources. State laws mandate businesses to notify anyone whose private information may be at risk immediately after a breach occurs. Because the company’s reputation is likely damaged as well, it may require additional spending on public relations services to help restore its good name.

There may also be fines and penalties assessed as a result of regulatory action, all the more reason to insure against cyber exposure, which can wreak havoc on a company that has been victimized.

 

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