Cyber hacking is big business, and no one is safe. Not individuals, not small businesses and not large corporations. Cyber Insurance is becoming known as the most important insurance for a small business to carry in 2017. The statistics are frightening - 43% of phishing attacks targeted small businesses in 2015, 60% closed within 6 months of a breach and cost an average of $217 per stolen record.
All of your data including the names of your customers, their contact information and the social security numbers are valuable information to a cyber-hacker. Unfortunately, your business and standard property insurance does not cover your most important asset, but cyber liability insurance does.
Even a business interruption insurance policy will not come to your rescue if your systems fail because of a malicious employee, computer virus or a hack attack. Identity theft, telephone hacking and phishing scams are very real possibilities and not covered by traditional business interruption policies. Cyber insurance will cover for loss of profits because of a system outage that is caused by a non-physical peril such as a virus or attack.
You can be held liable if you lose your third party data. If your data is breached, you could have expensive damage claims. There are severe penalties for losing credit card data. Merchant service agreements mean that you will be responsible for the expenses of forensic investigations, credit card reissuance costs and the fraud conducted on the stolen cards. Cyber insurance will protect you against most of these expenses that could run into hundreds of thousands of dollars.
In the U.S., most states have breach notification laws, and other countries are following suit. To comply with these laws takes time and money in the event sensitive personal date is lost. Written notification needs to be sent to those individuals who have been affected. Even if there is no law yet, a reputable company that protects its brand will provide breach notification. Cyber insurance could also cover regulatory fines or penalties.
Social media sites expose information at light-speed with little control. Your business site as well as your employee’s activity on these sites can trigger liability, if your business is responsible for the sites. Defamatory statements, leaked information and copyright infringement can all be covered with a cyber insurance policy. It may also cover the cost of a public relations firm to repair any damage done to your brand. It is becoming more and more likely that your business reputation will suffer from a cyber security breach. Losing the trust of your customers can be much more damaging than the financial loss you will incur to repair the effects of the breach.
It is important that a cyber liability policy covers laptops and mobile phones. Portable devices make it much easier to store and lose information. For example, a missing USB stick, a stolen iPad or a laptop left in a taxi are all real possibilities and, for a hacker, a goldmine. There are viruses being built just to attack mobile devices. Cyber insurance will cover stolen, lost or virus infested mobile devices.