Your Network Gets Hacked and You're Facing a Lawsuit; Will Your Cyber Insurance Cover Your Losses?
Technology is a fantastic tool. It makes our lives easier, our businesses more profitable, and our customers more satisfied. But it can also be our biggest liability. Outside our little circle of light, the cyber-wolves are circling, searching constantly for a hole in the fence or a flaw in our armor. No cybersecurity solution, no matter its depth or sophistication, is 100% guaranteed to protect you. In light of this, more and more businesses (large and small) are choosing to carry cyber insurance on top of their standard coverage. But what IS cyber insurance and what does it cover.
Cyber crime is on the rise. In 2020, the FBI's Internet Crime Complaint Center (IC3) reported a 69% increase in reports of cybercrime from 2019. Business Email Compromise, phishing scams, and ransomware attacks were the most costly types attacks, racking up an almost $2 BILLION loss across hundreds of thousands of small businesses. (Data Stream Insurance)
You know that you are very likely to be in an car accident sooner rather than later. That's why you carry car insurance. You probably carry homeowners insurance to protect your house. You may even carry life insurance. Insurance is our hedge against risk of loss or damage to our important property. If you knew that your business had more than a 60% chance of being the target of a cyber attack this year (which it does), wouldn't you want to be insured against that?
The cost of a network security breach can be crippling. The average cost of a successful attack can range from $120,000 to $1.24 MILLION. Of those businesses that are the victims of cyber attacks, 37% experience some kind of financial loss, 25% file for bankruptcy, and almost 10% of them go out of business altogether. Clearly, it's imperative not only to have cyber insurance, but to understand what it covers.
Cyber Insurance typically offers 5 types of coverage: (Cyber Insurance 101)
Privacy Liability Coverage
For companies that handle sensitive or personal data, this type of coverage is a must. If your company is breached, this coverage will protect you from liabilities related to loss or exposure of private data, and it may also cover legal expenses and the costs of fines or penalties.
2. Network Security Coverage
This type of coverage protects your company's privacy. In the event that your network security fails through business email compromises, data breaches, malware, or cyber extortion demands this type of coverage will take care of your first party costs. Medical practices and other HIPAA compliant organizations are often required to send out written notice to all their clients, set up an 1-800 number and a call center, and potentially even notify local news media that they have experienced a breach. (Breach Notification) Needless to say, all these costs add up quickly, so the better your coverage the better your protection will be.
3. Errors and Omissions Coverage
E&O coverage protects you in the event that you are prevented from delivering required services or fulfilling contractual obligations. This coverage also protects you against allegations of negligence and against losses due to error and omissions in your services.
4. Media Liability Coverage
Media liability coverage protects your intellectual property from infringement or theft (except for patent infringement. That's a whole different animal). This extends to both printed and online advertising and your company's social media posts.
5. Network Business Interruption Coverage
If your business would cease to function in the event of a cybersecurity attack or a network outage, you need this type of coverage. This coverage is designed to cover fixed expenses, lost profits, and extra costs experienced during your company's downtime.
Cyber insurance is an affordable but increasingly necessary part of securing your business. Hammer Technical Services partners with Data Stream Insurance to provide you with the best, most comprehensive coverage on the market. If you don't have a cyber insurance policy in place, please contact the Hammer Tech team for a FREE network evaluation and an introduction to the DataStream team.