If you are wondering if you need cyber liability insurance, then consider if the manner in which you conduct your business has changed over the last several years. What was once ordered over the phone is now ordered on-line. What was once locked in a filing cabinet and susceptible to only the local riffraff brazen enough to break into your office, is now stored on a server and subject to all the hackers of the world.
There are certainly precautions that all small business owners should follow as highlighted in a recent HPM Insurance blog titled How to Protect Your NH Small Business from Hackers; however, short of being a cyber-security expert, there is only so much you can do. Accidents happen and that is why most people buy insurance. People don't expect their home to burn, their car to crash, or their business to be hacked, but guess what.... it happens.
Examples of potential cyber liability claim scenarios:
- Laptop is stolen from your car which included personal information of your clients and employees,
- Management system is shut down for 4 days as a result of an employee opening an email containing a virus. Your business is not able to access its client files or accept payments. An expert needs to be hired to remediate the situation, but business suffers a loss of revenue with system down, and
- Cleaning crew mistakenly discards the completed tax forms for your subcontractors and employees in the dumpster. Personal information is now compromised and those affected file a class action law suit against the business.
Why do I need cyber liability insurance?
If you have a typical business insurance policy it is usually covering real property. Electronic data is not considered real property under most policy definitions, so it is not covered! Cyber liability insurance fills this gap and should be a critical part of your business insurance plan. Most cyber liability insurance coverage is for unauthorized use of, or unauthorized access to, electronic data or software spreading a virus or malicious code, computer theft, extortion or any unintentional act, mistake, error or omission made by your employees or outsourced IT service provider.
How much does cyber liability insurance cost?
Premiums are primarily based on your industry. If your business is an e-commerce bushiness doing on-line transactions and storing data such as credit card information, you would be considered a higher risk for data breach and hence subject to higher premiums. Businesses also involving medical records, dates of birth and social security numbers are also considered a higher risk.
What can you do to save money on your cyber liability insurance policy?
In order to purchase cyber liability insurance most insurance companies are going to require that you provide an outline of your current protection data plan or disaster plan.
If you don't have a formal protection plan in writing, the process of pulling one together may help you identify areas of vulnerability you had not considered before. Updated anti-virus software and fire walls are a minimum; however, do you have a procedure if employees use laptops or tablets off site?
Perhaps you are making assumptions that are not accurate. What if your employee frequently brings her lap top home but does not make a practice of locking her car? Do you have a salesperson collecting credit card numbers via e-mail?
Real examples of cyber-attacks on NH businesses and agencies
According to the New Hampshire Business Review (NHBR) both the town of Greenland and the Salem School District were recently attacked as was a Hudson IT consultant per Patch.com. Most attacks won't make the mainstream media; however, given the devastation that such an attack can cause to a business, it should be taken just as seriously as fire or theft. At least with a fire or theft, you have an object or building with a definitive value so you can estimate the maximum loss potential. With something as abstract as cyber liability, this is a bit fuzzier and certainly not something you would want to jeopardize your business over.
This material is for informational purposes only. All statements herein are subject to the provision, exclusions and conditions of the applicable policy. For an actual description of all coverages, terms and conditions, refer to the insurance company.