Cyber Insurance: Yes, you absolutely need it.
Cyber insurance is now critical to help protect your business.
Cyber attacks are becoming more frequent, clever and complex. Cyber insurance is now critical to help protect your business from major expenses, business loss, and regulatory fines and penalties.
General liability umbrella policies typically do not cover cyber events (Target’s insurance policy only covered 36 percent of its $252 million data breach costs).
This insurance comes in many different variations and costs, so it is important to know what product works best for you, considering and balancing coverage and cost.
Four key elements comprise essential coverage to protect against data breach and loss of customer data:
- Network Security
What is most important is that both cyber-crimes and liability are included in your coverage.
The policy may be a standalone, or a rider on to your existing policy. Always buy the most compressive coverage available that you can afford.
Here is why that is so important:
Broad coverage includes both first and third-party coverage. First party only covers your business, while third party will cover the claims against you from customers or clients as well as related damages and court costs.
The below comparisons show why you need both cyber-crimes and cyber liability coverage:
|Event||Liability Coverage||Crime Coverage|
|Loss of funds (escrow and operational, personal) due to social engineering and electronic fraud or theft||No||Yes|
|Fraudulent electronic transfer or divergence of funds||No||Yes|
|Employee electronic theft||No||Yes|
|Cyber extortion (ransomware)||No||Yes|
|Data breach expenses including legal costs, fines or penalties||Yes||No|
|Loss of assets and loss of business income||Yes||No|
|Recovery of systems and forensics; reputational damages||Yes||No|
|Economic damages through network security failure or failure of privacy controls||Yes||No|
Consult with your insurance carrier for specific coverage offerings and cost and weigh the decision that is right for your business and budget. Remember, the broadest form of coverage will best protect you and your business so while it may be more expensive, your business will be better protected against the risks we face in today’s business environment.
Tags: ALTA, ALTA Wire Fraud Survey Series, cybersecurity, escrow fraud, escrow security, wire fraud