Why you need cyber insurance for your organization
Major cyber attacks and security breaches have made headlines in recent years, and cyber security is a growing concern around the globe. You may think that insurance is only important for the real world, and not the digital world. With our society connecting online more, it’s important to recognize potential risks and have proper protocols in place to protect your customers, your employees, and your organization. This includes having a cyber-insurance policy to protect against the risks of being digital.
Here are some common scenarios of cyber security liabilities:
- Your security system is hacked by an outside party and steals customer credit card information and employee social security numbers.
- One of your employees loses a USB that contains confidential customer information that results in an investigation.
- A customer whose privacy was breached due to a systems failure sues your company.
- Your organization comes under a cyber attack that releases a virus on all-user systems.
- A company-wide systems outage results in financial losses and damages your organization’s reputation.
Who is vulnerable to a cyber attack?
Any organization that has an online presence is vulnerable to a cyber attack.
This may include collecting customer information online, fundraising, or a corporate website that does not have a fully secure connection. Even social media can make you vulnerable to hackers.
A recent survey on global economic crime found that one-third of global organizations surveyed experienced economic crime in the last two years, with cybercrime occurring 1 in 3 times.
You may think that only big banks and businesses are targets of cyber crime. This is not the only case. Other sectors hit by cyber crime include communications, chemicals, pharmaceuticals, insurance, and government and state owned entities.
What are the impacts of cyber crime?
Cyber crime causes big financial losses, damages reputations, violates privacy, and often results in investment and enforcement costs.
A study from the Ponemon Institute, a U.S-based independent research institute, found that the financial impacts of data breaches are increasing, and identified three distinct areas that make data breaches so costly:
-The increasing number of cyber attacks and costs to remediate the consequences.
-The consequences of lost business have a greater impact than the cost of the data breach. This cost component includes the abnormal turnover of customers, increased customer acquisition activities, reputation losses and diminished goodwill.
-The increasing data breach costs associated with detection and escalation, such as forensic and investigative activities, assessment and audit services, etc.
Doesn’t my business/general liability policy cover potential cyber attacks?
Typical general liability and errors and omissions coverage excludes losses incurred because of the Internet.
A cyber policy will fill in those gaps to cover internet-related losses, or seriously defray the costs. As well, cyber insurance products usually include protocols and internal plans against cyber risk that some companies might not already have in place.
Here are some ways that cyber insurance fills in the gaps:
Information Property Protection
Cyber and Privacy Liability protect your organization when your customers claim that a cyber breach has caused them financial loss.
It also mitigates risks or losses resulting from a network security failure or attack that damages the system and covers the cost to repair if it is expensive.
One lost USB or laptop that contains client information has the potential to cause massive privacy breaches.
Privacy breaches occur when confidential customer information is compromised in some way. Privacy protection covers the expenses your organization incurs as a result of an actual or alleged security breach. It includes notifying third parties or employees, independent security audits of your computer system, etc.
It also covers when the security breach causes your client to have to notify other affected individuals.
Theft and Extortion Threats
Cyber insurance protects your organization when under direct threat or extortion.
These threats may include preventing access to your computer system, introducing a virus, revealing confidential information, or damage your brand or reputation by posting false or misleading comments about you on social media sites.
Coverage includes investigation and settlement of threats and reimbursing all reasonable sums incurred as a direct result of a specific threat.
Business Interruption Insurance
If your system malfunctions or is under attack, your company could take a financial hit, lose clients, or damage its brand.
This coverage is essential to protect your business when a system failure causes financial loss and/or loss of current or future clients. This is especially important for smaller businesses that may have a smaller client pool and not have adequate infrastructure in place.
Software and Data Integrity
In the event that you are the target of a cyber attack, covers the cost of investigation, crisis management and data restoration.
Multimedia Liability and Advertising Injury
This protects when defamation claims are made, including libel, slander, trade libel, injurious falsehood, that causes emotional distress or outrage. It can also occur in cases of copyright or trademark infringement, such as taking a picture from the Internet and re-posting it without proper credit.
Cyber insurance is a must-have to protect your organization, whether you’re a start-up, big corporation, a non-profit, or somewhere in between. Our experienced brokers can work with you to create tailor-made security and privacy liability coverage for potential damages and vulnerabilities specific to your operations.
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