Cyber liability
CoverLink Staff No Comments

If you are a small business owner you already know that having liability insurance is a must. But what about cyber liability insurance? Standard liability insurance covers the insured in the event of property damage and/or bodily injury that may occur when clients use the company’s services, product, property etc.. However, this kind of policy will not cover you in the case of a cyber attack.

The cost of a cyber attack

No one is immune to cyber hacking attacks, no matter the size of your business or the industry you find yourself in. The website Hackmageddon publishes a list of recent high profile cyber attacks every couple of weeks. For example, between January 1st and 15th, 2017 they reported thirty-seven major attacks including ones on a number of universities, a human rights commission, Google, a large Denver software company, a leading competitive video gaming community, a cancer agency, Netflix, and a prominent tech forum, a number of foreign government offices… to name just a few (Hackmageddon).

As you can see, attacks occur in all industries and on all levels. But these are only the high profile attacks. Many attacks are a lot smaller in scale and yet can still cause an incredible amount of damage. Sometimes who the hackers are is discovered, but at other times information is stolen, money lost, and a reputation tarnished without the source being known.

The basics of cyber liability insurance

Cyber liability is the risk associated with possible data breaches that could occur while doing business on the internet or using public networks or storage capacities. There are many variations among policies and premium costs for cyber liability insurance Ohio, but two distinct risk categories can be determined and this is a good place to start: first-party and third-party liability.

First-party vs. third-party Liability

A first-party liability is where your or your business’ private information is breached. This could look like a virus or malware damaging internal IT systems or tax records being exposed. A third-party liability is when the private information of your clients is breached such as a hack into the Netflix user database where account information is compromised. Both of these categories of liability are relevant to companies of all sizes:

“A recent study by the U.S. Secret Service indicates that more than 72% of data breaches occur in small to medium size companies with an estimated average cost of a data breach being placed at more than five million dollars. First-party cyber liabilities can threaten a company’s liquid assets and competitiveness. Third-party cyber liabilities can be more devastating because it often ruins brand image and reputation, encourages sizable dollar lawsuits and initiates statutory fines”.

The risks are high and this is why data breach insurance is so important for all businesses today. It is now often said that it is not a matter of when you will be breached, but when will the data be used against you. Be ready and protect yourself with cyber liability insurance Ohio.

What types of cyber liability claims are occurring?

Laptop & devices theft

Yes, many of the headline hacks we hear about happen at big companies like Home Depot, Target, or Google. Small businesses make cyber liability claims in Ohio all the time as well though. Often these breaches are not reported on since smaller amounts of data are threatened. These are the kinds of attacks that may affect your business. A classic example of this is a stolen business laptop. Significant personal and business data is stored on work laptops, so if a burglar or even a rogue employee steals such an important item, a lot of costly damage is often caused.

Software Virus

Another example is the unleashing of a skyware virus. Often something like this may not even be meant for the business, but if an employee opens an infected email on a work computer, then such a virus could send the hackers screenshots of every email coming through the office without you realizing it.

Dumpster Diving

Dumpster diving is another way in which personal data can get out. You may have heard of a woman who was dumpster diving near a local medical office where she found records containing social security numbers and medical histories of hundreds of patients. This resulted in large governmental fines for the medical office. These are by only a handful of examples, but should give you the sense of the kinds of claims made.

What does cyber insurance pay for?

Now that we know the kinds of incidents that cyber security guards against, it is time to know what cyber insurance will actually pay for. With the fast growing capabilities of hackers and the rapid development of new technology, cyber liability insurance Ohio is shifting and changing quickly. It is a relatively new form of liability insurance as the need for it has skyrocketed in the past ten years. However, this also means that there isn’t one standard policy.

Cyber insurance is incredibly complex and therefore it is essential that you take the time to read the details of the policies offered to you. Typically, cyber insurance reimburses you for data breaches, however, how much they will pay and for what damages, varies greatly.

A good place to start is to review your exposures to risk and determine the areas in which you most need good coverage. An independent insurance agent is in a good position to advise you on this and help you through the process.

How can independent insurance agents help?

An independent insurance agent is a very valuable resource when you are looking in to purchasing data breach insurance. The following are some of the top reasons why you should speak with an agent:

  • Agents can help you accurately assess your cyber risks
  • Agents can advise you on setting up cyber security standards
  • Agents can evaluate what a cyber breach may cost your business
  • Agents can match your cyber exposure with data breach insurance coverage
  • Agents can explain how to implement a cyber component to your Crisis Response Plan