Category: Cyber Liability Insurance

3 Types of Cyber Insurance Every Business Should Have

What if my business does not deal with computers? Does that mean I really don’t need Cyber Liability Insurance?  What if I am the only person in my business who uses a computer?  Doesn’t that mean I don’t face all that much risk?  Let’s say I might need Cyber Insurance, but what kind and how much?

Do any of these statements sound familiar? If so, you definitely need Cyber Liability Insurance. The term Cyber Liability Insurance is used pretty generally because cyber security is such a young sector and the data about the risks are changing very rapidly.  Business owners and insurance companies are still having trouble determining who is at risk and how much risk those businesses actually face. Just because this is a new type of insurance coverage does not diminish the importance it can have for protecting your business.

Cyber Liability Insurance

Many business owners think a data breach can only occur to a big multi-national corporation. For the big data breaches that make the news, this is certainly true, but the truth is most data breach first start out with small mom and pop businesses. These mom and pop businesses are first hacked with the hackers intention of gaining access to a much larger database.  This usually occurs through carious types of vendor partnerships. In the case of Target and Home Depot both of these breaches were first accessed by a much smaller business partner, who was hacked.  For this reason it is immensely important for you to talk with an experienced independent insurance agent about all the risks your business faces.

The three main types of Cyber Liability Insurance Coverage are Cyber Security, Cyber Liability and Technology Errors and Omissions Insurance. The first two deal with risks relating to a Data Breach. The third deals with companies that provide technology services and products.

Cyber Security

Cyber Security Insurance is also known as Privacy Notification and Crisis Management Expense Insurance.  This coverage includes coverage for first party damage to you and your business. This coverage does not protect your business from damage done to third parties. Cyber Security Insurance deals specifically with the immediate response costs associated with a data breach. In many cases it is required by law to find out how the breach occurred, notify those affected and provide credit monitoring services for one year.

Examples of costs included in Cyber Security Coverage include:

  • hiring a forensics expert to determine the cause of the breach, suggest measures to secure the site and prevent future breaches

  • hiring a public relations agency to assist in dealing with the crisis

  • setting up a post-breach call center

  • notifying affected individuals whose personally identifiable information (PII) has been compromised

  • monitoring these individuals’ credit (usually for 1 year)

  • paying the costs to “restore” stolen identities as a result of a data breach (e.g., expenses of notifying banks and credit card companies)

Cyber Liability

Cyber Liability

Cyber Liability Insurance, also termed Information Security and Privacy Insurance, covers the insured’s liability for damages resulting from a data breach. It does not cover expenses that deal with the immediate response cost. This type of insurance protects businesses which sell products and services directly on the internet.  Also, it protects businesses which collect data within its internal electronic network. The most common forms of data breach involve personal or financial information like credit card numbers, bank account information, social security numbers, health information, trade secrets or intellectual property.

The types of situations where this information are accessed include:

  • An employee’s car is broken into and a business laptop is stolen.

  • An email containing sensitive customer information is sent to the wrong person.

  • Important paperwork, like a credit application, is taken during a break-in.

  • Failure to timely disclose a data breach.

Technology Errors and Omissions

Technology Errors and Omissions Insurance, also referred to as Professional Liability or E&O, is a form of liability coverage that protects businesses who provide or sell technology services and products. This coverage prevents businesses from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in a civil lawsuit. This can include business who sell and service computer products, but it can also include graphic designers and advertising agencies who create digital content that can harm a company’s reputation. It covers computer programmers who may create faulty code for a website that causes that business to mail products to the wrong addresses.

Cyber Liability Insurance is a new and emerging part of the insurance industry and it is not going anywhere. These risks are only going to become stronger as more and more business operate online. Before too long Cyber Security Insurance will be a normal part of businesses insurance policy just like workers compensation Insurance and general liability Insurance are today. Now is the time to consider if and how much cyber insurance your business needs.

5 businesses that need Data Breach Insurance

Insurance to protect a business in the instance it has a data breach is becoming much more common.  This risk is only going to grow stronger as more and more information is stored digitally.  There are three main policies a company can secure, Cyber Security, Cyber Liability and Technology Errors and Omissions Insurance.  The first two coverages are typically sold together and the third is sold to specialized technology companies. Not all small businesses will need Technology Errors and Omissions Insurance.

Data Breach Insurance

Cyber Security Insurance

Cyber Security Insurance is also known as Privacy Notification and Crisis Management Expense Insurance.  Cybersecurity insurance is designed to protect eh damages to you and your business.  It can mitigate losses from a variety of cyber incidents, including data breaches, business interruption, and network damage. A robust cybersecurity insurance market could help reduce the number of successful cyber attacks

Cyber Liability Coverage

Also termed, Information Security and Privacy Insurance, Cyber Liability Insurance covers the insured’s liability for damages to third parties resulting from a data breach. It does not cover expenses that deal with the immediate response.  This type of insurance protects businesses which sell products and services directly on the internet.  Also, it protects businesses which collect data within its internal electronic network.

Technology Errors and Omissions Coverage

Technology Errors and Omissions Insurance (also known as Professional Liability Insurance or E&O) is a form of liability insurance that helps protect businesses providing all types of technology services and products.  This coverage prevents businesses from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in a civil lawsuit.

Consider the impact to your business if:

  • A software glitch causes a client to lose important data.
  • A flawed program installation keeps a client from receiving orders.
  • Missing code prevents a customer from booking reservations.

Costly mistakes can happen, even to people with the best training and years of experience. It’s human nature. That’s why Technology Errors and Omissions Insurance is essential to protect your business.  Agents at Technology Insurance Shop.com have the industry insight to help tailor coverage to your individualized needs.

Get the best answers to Cyber Security Insurance questions at MyInsuranceQuestion.com

 

Medical/Dental Offices

Medical Dental Offices store just about every bit of a client’s personal sensitive information.  This can include the customers date of birth or social security number, their credit card and bank account numbers, or even their sensitive medical information.  Protecting your business from the potential of this falling in to the wrong hands is extremely important for the long term success of any business.

Law Offices

Lawyers have a legal obligation to keep every bit of information they receive confidential.  When and if this information is made public it can have extremely drastic effects to the clients a law firm is representing.  Cyber security, cyber liability are needed for all law firms and depending upon the scope of the business, some law firms may also need technology errors and omissions coverage.  Speaking long and honestly with a trusted independent insurance agent can help determine the risks your law firm faces and what type of coverage you need.

Accounting Firms

Accounting Firms store clients most sensitive financial information. The information that they have is some of the most valuable information a cyber-criminal can get access to.  For this reason, it is extremely important to protect your accounting firm with cyber security and cyber liability insurance coverage.

Architecture and Engineering Firms

Architecture and Engineering Firms have access to the plans of new and existing businesses. If this information falls in to the hands of cyber criminals or the client’s competitors, the impact can be extreme.  These firms are one of the few businesses that need all three types of insurance related to data breaches. Cyber liability will cover your liability to third parties, cyber security will help with the damages to you and your business and technology errors and omissions coverage will help protect you from problems with technology expertise and advice your business may give.

Retail Businesses

Retail businesses are one of the most common places for cyber criminals to access a victim’s sensitive financial information.  As more and more purchases are made with a card instead of with cold-hard cash, retail establishments are a prime target for cyber criminals. Criminals use techniques as simple as a skimming machine at an atm or a gas station pay at the pump location.  Once the information is accessed it is commonly sold on the black market for other criminals to create fake debit and credit cards for access to the victims hacked accounts.

First Party vs. Third Party Liability

The difference between first party and third party liability is essential to protecting a business properly. These differences are one of many aspects many business owners neglect far too frequently. Many business owners see insurance as a fixed cost. Others see it as some sort of tax. Considering some of the coverages are required by law in most states it is easy to understand why some business owners look at commercial insurance in this way. They are also part of your overall plan to protect the long term viability of your business. At the very least these policies should be. Protecting your business from both first party and third party liability is essential to properly protecting your business and here is an in-depth description of both types of coverage and why your business needs both.

First Party vs. Third Party Liability

The most basic example of the contrast between first and third party liability is in the two types of coverage most businesses purchase.  These policies are Commercial Auto, Commercial Property, General Liability, and Workers Compensation.  General Liability and Workers Compensation are common for all businesses because they are required by law for most businesses in most states.  Commercial Auto and Property Coverage are common because many businesses own property and vehicles.

Commercial property, commercial auto, and workers compensation are examples of first party coverage because they cover damages to you and your business (ie damage to your vehicle, property, or employees).  Another good example of first party coverage is a coverage like inland marine insurance.  This coverage protects damage to your specialized equipment like a lawn mower or an expensive camera for a photographer.

General liability is an example of third party coverage because it protects your business from the liability your business faces to other people and organizations. In this case the liability would be to anyone damaged by the actions of your business.  Third parties can include customers, vendor partners or anyone damaged by the actions of your business.

Find the answers to your questions about third party liability at myinsurancequestion.com

Workers’ Compensation and General Liability are required by law for most businesses in most states because they deal with the liability a business faces to both third parties and injured employees. If businesses chose not to secure these coverages and accidents occur, the only course of action for the victim would be to take the liable business to court. Because of these requirements they are frequently referred to as the ‘Exclusive Remedy’.

Other policies like those that cover a Data Breach are typically sold in tandem. Data Breach insurance is usually paired in combo as Cyber Security and Cyber Liability.  Cyber Security,  also commonly known as Privacy Notification and Crisis Management Expense Coverage,  protects damage to you and your business that result from a data breach. These costs are commonly referred to as the ‘immediate response costs’.  They could include, notifying all customers damaged by the breach, hiring a forensic expert to find the source of the breach, providing credit monitoring for those victims for up to one year (required by law in most states) and hiring a public relations firm to restore your businesses tainted image.  Cyber Liability covers your liability to third parties. These third parties can include customers, vendors or anyone else damaged by your business as a result of the data breach.

 

What is Cyber Insurance? Does my business really need it?

Cyber Insurance is a new and emerging part of the insurance sector. Most of the coverages are so infant that common terms have not yet been established by the insurance industry. Most of the risks associated with cyber technology are so new that many business owners still think they do not effect their business. Those business owner’s are wrong.  In today’s day and age, it is becoming more and more difficult to operate a successful business without a presence online or without storing some type of information about your customers. In these situations a business must have cyber insurance or run the risk of being liable for all costs as a result of a data breach.

Learn how to prevent your small business from being a victim of a cyber attack at myinsurancequestion.com

A normal General Liability Insurance Policy does not cover damages caused by most data breaches. This is a fact many business owner’s do not realize. Many business owner’s think General Liability Insurance is an all encompassing coverage. It is not all encompassing. Most General Liability Policies covers losses due to bodily injury and property damage. Third party information lost in a data breach does not fall under losses covered by a General Liability Policy. A separate Cyber Insurance Policy is necessary in addition to a General Liability Policy.

Frequently business owner’s think they just don’t have enough customers for cyber insurance to be relevant. They might think not enough people in their business even use a computer for business purposes or they do not have enough customers for someone to want to hack them, but the main way data is stolen is not from sophisticated hacking techniques. Data is often stolen by someone stealing a laptop. A stolen laptop could happen to any business, not just those who work with advanced computer technology.

When a data breach does occur, the average cost to a business is around $200 dollars per customer. If your business loses the information of 100 customers, it could cost your company $20,000. If that amount were 10,000 customers it would cost about $2 million. Could your business survive a loss of these amounts? If not than you need some form of cyber insurance.

There are three main types of coverage a company may need:  Cyber Liability, Cyber Security and Technology Errors and Omissions. The first two deal with coverage resulting from a data breach. The third deals with companies that provide technology services and products.

Keep your business secure from a data breach by reading the most up to date information about cyber insurance at my insurance question.com

Cyber Security

Cyber Security is the term most commonly used to refer to first party coverage. First party coverage deals with damages to you and your company. These damages are often referred to as the immediate response costs resulting from a data breach. These costs include notifying all customers who are affected, hiring a forensic team to find out how the breach occurred and providing credit monitoring services for up to one year. These three costs are required by law in most states. Cyber Security Coverage would also cover costs like hiring a public relations firm to help repair your businesses tarnished image and setting up a post breach call-center to service customer concerns.

 Cyber Liability

Cyber Liability is the term most commonly used to refer to third party liability dealing with a data breach. Some industry professionals may refer to it as Information Security and Privacy Insurance. Third party coverage deals with damages to anyone who is not you or your employee, who was harmed by the data breach. It includes customers whose data was stolen or vendors you do business with. This will pay up to the policy limits for court costs, defense costs, some fines related to the breach and lost monies that were stolen from those effected.

Technology Errors and Omissions

The final type of coverage is Technology Errors and Omissions Insurance. This type of policy is a form of liability insurance that helps protect businesses providing all types of technology services and products. This coverage prevents businesses from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in a civil lawsuit. Costly mistakes can and will happen, even to employees with the best training and years of experience. Technology Errors and Omissions Insurance is designed for when these errors take place. A good example where this coverage is necessary would be if a web developer provided faulty coding that causes a business to be closed for several days because their website is down.

Not all businesses need all three of these coverages. The most common coverages businesses need are Cyber Liability and Cyber Security. Not all businesses will need Technology Errors and Omissions Insurance, but those that do typically are at a very high risk if not insured. Most insurance providers prefer to offer these coverage’s as a part of a Business Owner’s Policy (BOP). A BOP usually includes general liability, business property, business loss of income, EPLI and cyber insurance. Offering packages like this contain the cost to the business and helps ensure there are no gaps in coverage. In today’s business climate some form of cyber insurance is essential to all businesses. Is your business at risk?

 

 

Artisan Contractors

Why would an artisan contractor need data breach coverage?

Data breach (or cyber liability) coverage has been one of the hottest topics in the insurance industry over the past few years. Insurance companies and agents alike unanimously agree that this line of insurance coverage is becoming critical for small businesses to protect themselves, but the odd disconnect is that many businesses don’t see the value.

First, let’s start by explaining what data breach coverage is designed to protect. This policy is designed to cover data breach recovery costs such as notifying any person/business potentially affected, good-faith advertising, and repairing security of the system. The coverage is important because a business is held responsible for protecting the personal information it collects from someone else. Most states have already passed (or are passing) regulations for steps a business must take for their clients when a data breach occurs. These regulations typically require formal notification that a breach has occurred to all potentially impacted clients, and typically the business must offer credit monitoring services for those clients for 1 year. Those steps alone can amount to a huge expense.

Most artisan contractors feel like this risk doesn’t relate to them at all, and others don’t realize that they aren’t properly covered. A recent study found that 39 percent of business owners think that data breach coverage is a part of their general liability policy. This thinking is wrong. Occasionally, a business owners package (or BOP) policy will include some minimal data breach coverage, but the limits are so low that the coverage would likely only cover a portion of any claim that existed. Many artisan contractors buy GL-only policies instead of a BOP anyway, because they feel like the extra coverage’s aren’t important for their business … and cyber liability is one line of insurance that is still considered a “luxury” expense.

In fact, one of my clients who is an artisan contractor and does HVAC work expressed himself pretty clearly: “Don’t try to sell me something that has no impact on my business. I don’t keep much information on my clients, and I’m so small that nobody would want to take the time to hack my company.”

That’s when I brought up the Target data breach, which he knew about because he was one of the victims and had to get new credit cards issued because of the hack. What this artisan contractor didn’t realize was that the hackers used a third-party vendor, HVAC company Fazio Mechanical Services, to gain access to the Target system.

The Home Depot data breach also began via a hack of a third-party vendor. In fact, using a third-party vendor is becoming the most common method for as an access point for a larger hack. As an artisan contractor, this is becoming the new risk and larger companies are starting to take notice.

Many larger organizations are now requiring a sub contractor to carry a separate cyber liability policy, along with the more typical insurance requirements (workers compensation, general liability, umbrella, etc.).

Over the next few years, I think getting a data breach policy is not only a necessary way to protect your business, but it is also a great way to separate yourself from the competition.