Why is cyber insurance so important to my business?
In the modern digital economy, information technology is at the center of business activity. With nearly every business having an online presence – from website, mobile app, social media, and more – cyber insurance is one of the most critical services your business can use to protect itself from the exponentially growing cyber threat landscape.
Cyber insurance (a/k/a Cyber Liability, Internet Liability, Electronic Media Liability, and Network Security & Information Liability insurance, among other names) helps companies weather the storm from many technology-based risks. These digital risks can significantly impact your business income, and in some cases, have forced businesses to close.
There are significant risks associated with a company’s IT infrastructure that can cripple operations. Cyber insurance can also provide coverage for privacy liability incidents (including the loss of protected, private information through a hack, or simply a misplaced laptop, USB stick, or even file cabinet), as well as media liability events (providing protection if you are accused of defamation, infringement, or other wrongful acts with respect to your website or other electronic media).
Does my business need cyber insurance?
Cyber Insurance provides financial protection where it’s needed most: online. Even a business’s most basic operations can put it at risk for malware, cyberattacks, and data loss:
Processing credit cards
Accepting digital payments
Collecting customer data
Storing confidential information
Storing medical and financial data
Ultimately, anyone conducting business online is vulnerable to a potential attack, which means every company operating in today’s digital environment should get protected!
It takes years to build a reputation, trust, and a successful business – but it can be ruined in 5 minutes
Running a business means wearing many hats. From operations and marketing to customer satisfaction and coffee filter replacement, being the chief often means charting new territory, especially for start-up or small-to-medium size businesses.
When it comes to digital risk and cyber insurance, though, the soundest decision a business can make is to rely on experts. Why? Because digital risk can knock even the sturdiest company off course (Target, LinkedIn, Alibaba, Adobe, and My Fitness Pal all had massive data breaches in the last 15 years). As our partner Periculus describes it: “in our ever-evolving digital economy, these risks are the flipside to the opportunities that being connected provides.”
Cyber insurance gives businesses an opportunity to transfer their digital risk to a third party. With a broad range of coverage for incidents that are often preventable but never-the-less real, the best cyber insurance is tailored to the type of business.
What Are the Risks – And Why Do They Matter?
The success of your business extends beyond the walls of your company. Your employees, their families, your community, your peers – and yes, us – all want your business to win. Hackers and those who want your information, however, do not. Finding the best protection for your business means understanding the implications of a breach and doing everything possible to prevent and protect against it.
If you can’t access your bank account due to a phishing scam — that’s a business issue. If your employees can’t work because a server is inaccessible — that’s a business issue. Cyber risk is a real business issue for each and every company.
Cyber insurance helps ensure that if you do have an event, there is a path to recovery.
Some of the risks your business faces in today’s digital economy include:
Ransomware: A type of malware that prevents or limits people from accessing their data and/or systems, either by locking the system’s screen or by locking files until a ransom is paid.
Phishing: When a person is contacted by email, telephone, or text message by someone posing as a legitimate contact who is attempting to trick them into providing sensitive data.
Malware: a broad term for viruses, worms, trojans, and other harmful computer programs hackers use to wreak havoc and gain access to sensitive information.
Distributed Denial-of-Service (DDOS): Attacks that target websites and online services to overwhelm them with more traffic than the server or network can accommodate to render it inoperable.
Data Breach: Exposes confidential, sensitive, or protected information without permission to an unauthorized person.
Website/Domain Spoofing: Cyber criminals fake a website name to try to fool users into giving them credentials or access to the website.
The fact is that 60% of small companies go out of business within six months of falling victim to a data breach or cyber attack. With both the financial security and the future of your business on the line, having the right cyber insurance will enable you to quickly get back on your feet.
What does cyber insurance cover?
Coverage provided by cyber insurance policies may include first party coverage against losses such as data destruction, extortion, and theft. Hacking, ransomware, denial of service attacks, or even systems failure events that cause business interruption losses can be covered, giving you, the business owner, peace of mind.
Additional protection can also include third party liability coverage which indemnifies companies for losses to others caused, for example, by errors and omissions in your technology, failure to safeguard data, multimedia wrongful acts such as defamation, as well as regulatory fines and penalties. Other benefits can include coverage for costs related to post-incident breach response and public relations services, and extra expenses to restore the normal operations of your business, among others.
Cyber insurance is designed to cover many forms of loss and liability that your business could be exposed to its everyday use of technology.
What does cyber insurance not cover?
In general, most cyber policies do not cover intangible damage that your business might suffer following a cyber incident. These intangibles are things like:
Reputation and brand harm
Loss of future revenue (that is to say, loss of revenue or income that extends beyond the business interruption event)
Lost value of intellectual property such as patents, among others
In addition, all cyber insurance policies include a variety of exclusions to coverage. For example, many cyber insurance policies exclude third-party coverage for property damage, bodily injury, and pollution losses, or liability that might result from a physical cyber-attack.
At TIP National, our Cyber Insurance capability provides both First- and Third-Party coverage for numerous classes of business. Coverage is available nationwide through our insurance carrier partners and is tailored to fit your business needs.
3rd Party Liability Coverages
Network & Information Security Liability
Regulatory Defense & Penalties
Multimedia Content Liability
PCI (Payment Card Industry) Fines & Assessments
Coverage for expenses to defend you and any damages resulting from your liability to a 3rd party, or for regulatory fines and penalties, multimedia wrongful acts (such as infringement, defamation, piracy, etc.), and PCI fines and assessments resulting from a failure in your security, data breach, or privacy violation.
1st Party Liability Coverages
Bodily Injury & Property Damage – 1st party
In the event of a security failure (i.e., physical cyber-attack), coverage for losses resulting from bodily injury or damage/impairment to your tangible property, as well as damages resulting from any liability you may have to a 3rd party, including regulatory fines, penalties, and pollution liability.
Coverage for costs to replace your computer systems that are permanently impacted by malware.
Fund Transfer Fraud
Coverage for funds transfer losses you incur from a failure in your security or social engineering.
Digital Asset Restoration
Coverage for the costs to replace, restore, or recreate your digital assets that are damaged or lost following a failure of your security.
Business Interruption & Extra Expenses
Coverage for financial losses resulting from a failure in your security, data breach, and even systems failure, as well as the extra expenses you incur to bring your company back online.
Coverage for the costs to respond to an extortion incident, including money, securities, and even virtual currencies paid.
Crisis Management & Public Relations
Coverage for the costs to respond to a breach including 3rd party incident response and public relations experts, customer notification costs and credit monitoring, media purchases, and legal fees; and advise in connection with the incident, among others.
Based on the type of business you run, however, you may need other types of insurance to create a comprehensive strategy to manage your risk exposure, such as:
General Liability Insurance
Commercial Property Insurance
Employment Practices Liability Insurance
Professional Liability Insurance
How Much Does Cyber Insurance Cost?
Every policy will differ based upon the risk factors of the business. However, we are able to provide access to several different policies through Great American Insurance Company.