Written by: Lindsey Lessard Director of Client Services, Broker Representative for Alternative Balance
What is Cyber Liability insurance?
Cyber Liability insurance delivers financial protection and coverage for the wide range of cyber incidents that impact businesses. This can include network incidents, email scams, ransomware attacks, cyber-crime, social engineering, and more. A big component of what is at risk in cyber incidents are data breaches. This is when personally identifiable information (PII) is taken by an unauthorized party. This can be something as simple as birth dates and phone numbers to more serious items like social security numbers or home addresses.
If you are responsible for collecting and/or storing any personally identifiable information for your
clients or use a third party to collect/store it for you, we would highly recommend purchasing cyber liability.
1. Liability and Property policies don’t include data
When you purchase liability and property coverage, it doesn’t automatically extend to data breach scenarios where personally identifiable information is lost, shared, or stolen. This is because it is difficult to measure the value of data as personal property. Exclusions like this can leave a big gap in coverage for small business owners, and cyber coverage can help to bridge that gap.
2. No one is immune
CyberCrime Magazine estimates that by 2025, cybercrime will cost the world over $10 trillion annually. That is an absolutely astronomical number considering the source of the funds and that a lot of the victims of cybercrime are small businesses. Smaller businesses are typically targeted because they have less protection in place to prevent incidents, such as a dedicated IT department or multi-factor authentication.
3. Severe penalties and high out-of-pocket costs
In the event of a data breach, you may be responsible for the clean-up of the breach, including notifying all affected clients and paying any regulatory fines. It costs approximately $250 per year to monitor one client’s credit activity. Depending on how many clients you have, that can add up quickly.
4. Third-party data liability
If you utilize a third party (like an online service) to store data or process payments, the whole of the risk is not transferred to them. It is important to ensure that you have the right insurance coverage to protect your business against losses or damages in the event of a breach. This is because your business is still responsible for holding data for and about your clients that could be personally identifiable information. Examples of this may include passwords, order history, emails, addresses, client notes, payment details, etc.
When choosing a third party provider for storing data and processing payments, it is important that you also ensure that they have their own adequate insurance for both cyber and errors & omissions liability and that it extends to data breach, damages, and business interruption.
5. Protecting your clients
Your clients are your most important business asset. Without them, your business can’t function.
Fostering trust with your clients is of the utmost importance and that includes protecting their data or at the very least, being able to take care of them in the event of a cyber incident.
Cyber Liability Coverage Options Through Alternative Balance
The Alternative Balance cyber liability option includes coverage for the “theft, loss, or unauthorized disclosure of personally identifiable information…that is in the care, custody or control of the insured or a third party,” which can include HIPAA-related breaches and fines.
If you are interested in adding cyber liability coverage, you can add it to your current policy through your online account 24/7, or contact us at [email protected] or give us a call at 1-800-871-3848 Monday-Friday 9am-5pm EST.
Want more insurance tips and information? Check out our other monthly insurance blog posts by following this link! New posts are uploaded during the first week of every month. If there are any specific topics that you’d like us to touch on, please shoot us an email at [email protected]!