CYBER INSURANCE – What is it, and why does your business need it?

A cyber-attack on your business can be just as devastating and damaging as any other type of Insurance loss. Cyber-attacks don’t look as obvious as a building burnt to the ground; however, the damage can be just as extensive and far-reaching. This damage is not limited to your business itself, but to your customers, vendors and any person that has transacted with your entity.

Since a cyber-attack can be hard to ‘see’, many business owners feel that they don’t have any need for Cyber Insurance.  In some instances, if it happens to someone, they believe their solution is to simply purchase a new computer. The reality is that any person that conducts business on a mobile phone, tablet or computer is exchanging information through a virtual channel, and therefore has a cyber risk to which they need to respond. Other common cyber threats could occur via a website and/or social media presence, online credit card transactions, and or to a collection of private information stored electronically. If you have any of the above, you qualify for coverage.

With cyber-attacks on the rise, it is good to take some time to understand what type of cyber activity can be covered by your typical Cyber Insurance policy and have a discussion with your agent to plan accordingly.

Most Insurance companies can add an endorsement to a business owners or general liability policy that will provide coverage for any type of basic cyber-attack or identity fraud claim. Beyond the incidents that are initiated by a cybercriminal, examples of scenarios that would present a cyber claim include the following: unintended disclosure of information or accidentally sending an email to the wrong person, theft of a company laptop or smartphone, unintentional disclosure of PII (Personally Identifiable Information), and transmission of a virus by opening a phishing email and system access by an unauthorized user (former employee, disgruntled employee, or hacker). Most cyber insurance policies will provide public relations services and guidance when you think you may have been attacked. When time is of the essence and you need to communicate with your clients properly and effectively, this can be of great value.

If you think remembering your online passwords is tough, imagine identifying, navigating, and repairing a security breach of your business. One of the most common cyber-attacks is a Ransomware infection. In recent years, 75% of cyber claims reported were for ransomware attacks. The average payout for those claims was $312,000. A ransomware attack is when a criminal takes over access to your operating system and denies access until you pay the ransom. Complying with the extortion demand may or may not restore your system to normal operating status. Companies large and small are targets for these types of attacks.

Your next step is to make sure you take responsibility for your cyber safety with strong policies and procedures. Familiarize yourself with the best practices in your industry and understand what controls you need in place to protect you and/or your business. A strong Cyber Insurance policy will ensure confidence that you can put the best virtual version of your business online.

You may visit Carroll Business Quarterly to read the published article.