Data Breach Coverage Within Cyber Liabilty Insurance
By: Keith Goodwin, Capstone Brokerage Risk Manager, April 2014
The news has been focusing on data breaches at several large companies over the past few months. Companies such as Neiman Marcus and Target recently had their credit card systems hacked into. This allowed access to patrons’ personal information, putting them at risk for things such as bank fraud and identity theft. This type of cyber risk faces many retailers here in Las Vegas. However, the need for cyber liability and protection against a data breach doesn’t stop with retailers.
Almost every industry and business in the world now operates online. This alone means there is a growing demand for cyber liability insurance among businesses. I recently talked about “Doing Business Now and Cyber Liability” and want to further expand on the importance of protection against a data breach.
Every business should consider cyber liability insurance to help insure they are protected, at the very least, against a data breach. Think of cyber coverage like this. It is coverage for things that are not tangible but still extremely important in the day to day workings of a successful business. A company’s data may arguably be the most important asset to a company. When a data breach occurs, a loss of these assets can be astronomical.
What exactly is a data breach?
Well, it is the intentional or unintentional release of protected information to an untrusted environment. Seems pretty important which is perhaps why it is the most talked about form of cyber liability insurance. Data breaches should be a major concern for most business owners. A data breach can cripple a company and bring a thriving business into a dark world of lawsuits, negative reviews and perhaps business closure. It still shocks me when I have a client that does not have a cyber liability policy with data breach coverage in place. In today’s world I find cyber attacks and data breaches among the biggest threats to a business.
What does Data Breach protection mean?
Imagine your company sever has been hacked allowing the hacker access to information such as employee social security numbers, and/or client names and contact information. Your company is responsible for keeping this information stored safely. What if the hacker sends spam to the client infecting their computer with a virus or worse sends them material that appears to be from you but isn’t? Could you handle the financial end of fixing a problem such as this? Your employees are also at risk for identity fraud and possibly need to take extra steps to have their credit monitored. A cyber liability policy with data breach protection can help to pay for both of these situations.
What if the hacker deletes all of your client’s information, what would you do? Could your business survive? Data breach protection could also help to restore your server and cover the cost associated with the breach up to the policy’s limit. Often legal counsel is included in the policy as well, thus further protecting you if any lawsuits are filed from breach.
More often then not the information that is stored on company’s server may be more important then any tangible asset the company has. In the event that there is a data breach and it causes damage or destroys company databases or programs that store pertinent information, most standard insurance policies will not cover the loss.
Cyber liability with data breach protection means that you are protected from many of today’s online threats. Services such as data restoration and rectification are some of the key components to cyber liability insurance policies. This ensures that information can be easily recovered or repaired in the event of a loss. A great argument if you are still on the fence about purchasing cyber insurance is if you cover the equipment why wouldn’t you cover the important data that is stored on that equipment?
