Since October is National Cyber Security Awareness Month, it’s only fitting that we write about Data Breach. We have all seen the headlines. Store after store having data breaches and their customers are left wondering if their information was stolen. I know I wondered on a few occasions if I was a victim. Even private pictures are at risk of being stolen and exploited. When a data breach occurs, a quick response is crucial to minimizing the damage to a business’s reputation. Data breach insurance can be the difference between a quick, organized response and a response which further erodes the public’s opinion. As we all know, with all the social media networks and media outlets out there, protecting your company's brand and reputation is vital.
While most business owners understand the value of having their business covered by business insurance, they do not always realize that there is an additional option that will further protect them in the event of a data breach. Due to recent breaches, awareness is up. According to Marsh, LLC, an insurance brokerage firm, one out of three companies has insurance to cover data breach losses. A recent study showed that 43% of companies have had some form of data breach in the past year, which means some businesses were left without coverage. Depending on the information stolen, the typical cost to the company in the event of a data breach is $120 - $300 per record stolen. Even for a small business, those numbers add up and can quickly become overwhelming.
Data breach insurance is specifically designed to address the needs of a business that has been attacked in order to gain access to personal information, it is handled by a team of professionals who can monitor the situation and determine how best to correct the company’s public image and provide resolution. This is done through prompt notification of the affected customers, monitoring the company’s public image, addressing any negative fallout immediately, and ensuring that any legal or liability issues which occur from the data breach are dealt with quickly and professionally. Insurance can even extend to monitoring the affected customers credit to ensure that they do not have issues due to the breach in the future.
As with any risk, prevention plays an important role. Preventing a data breach should be a priority of all business owners and risk managers. Some insurance companies also offer some services before a breach has even occurred. These services include making sure employees are aware of basic guidelines which can decrease the occurrence of a data breach via a preparedness website. The best mindset to have is, it’s not a matter of if a data breach will occur, but when.
If you have any questions regarding Data Breach Insurance or other Business Insurance coverages, please contact us today. Below are some resources that you might find helpful, including an application.
More and more small business owners are talking about Cyber Liability these days. Unfortunately they do not bring it up until something happens to them or something happens to a fellow business owner. Austin, TX is home to many tech companies. I believe it's only a matter of time before more business owners start looking at this insurance coverage.
Most business entities have digital content stored on email servers, websites, laptops, cell phones or computer networks. This content is vulnerable to damage by viruses, hackers, identify thieves, and employee saboteurs. Damage to electronic data can disrupt a firm’s business operations, creating income losses and generating extra expenses. Data losses that involve sensitive information can result in lawsuits against the firm and damage its reputation.
We live in a digital age where there are perils everywhere. Your standard BOP or General Liability policy probably does not include this type of coverage, so consider talking to one of our agents about Cyber Liability. Here is an overview of the coverage options:
• Crisis Management Coverage: Covers the costs of a public relations consultant to reestablish your business reputation. Intended to mitigate additional damages from the data breach.
• Damage to Electronic Data: Covers the cost of replacing or restoring electronic data that has been lost, corrupted, altered, damaged or stolen due to a hacking event, a virus or other malicious computer code or a denial of service attack.
• Business Interruption and Extra Expense: Covers loss of business income and extra expenses incurred during the period of restoration due to an interruption of the insured’s business operations due to a covered event. Many forms cover cyber terrorism.
• Crime Coverages: May cover extortion demands based on threats to harm the insured’s data or computer system. May also cover funds transfer fraud and/or computer fraud.
• Computer Forensics: Covers the cost for a thorough security audit of your computer systems to identify the source and scope of the data breach.
• Notification costs: Covers your cost to fulfill any obligation you have to notify third parties of an actual or suspected breach of personally identifiable
• Credit monitoring: This is a necessary service to mitigate potential identity theft claims. Covers the cost to provide credit monitoring and fraud alert services to affected customers.
• Network Security: Covers claims arising out of the insured’s failure to prevent a virus from damaging data or a hacker from gaining access to a computer system.
• Privacy Liability: Covers claims arising from the insured’s failure to protect the privacy of customers and other parties. Some forms cover claims by the insured’s employees as a result of breaches of employee data.
• Website Media Liability: Covers damages against the insured resulting from certain intentional torts like invasion of privacy, public disclosure of private facts, defamation, libel, or slander. Also covers violations of intellectual property rights like infringement of copyright, trademark, trade name, trade dress, title, slogan, service mark or service name. Plagiarism and domain name infringement may also be covered.
In the wake of the Snowden affair, the NSA will undoubtedly reassess its security protocols. Clients should reassess their cyber security practices as well. The odds are if their business hasn’t been hacked yet, it will be. And if it has already been hacked, it will probably be hacked again.
Source: Burns & Wilcox