With the prevalence of technology in our daily lives, most people have been the victims of cyber attacks, including malware, hacking, or phishing. The repercussions of a cyber attack can become immensely more complex when a business is involved. Potential consequences includes, loss of business, lawsuits, public distrust and in some cases, bankruptcy.
Just in 2016, companies such as Yahoo, LinkedIn, Dropbox, Wendy’s, Oracle and the U.S. Department of Justice all experienced some form of a data or security breach.
Companies that store and maintain client information, use cloud based storage or collect online payment information, should seriously consider adding cyber liablity insurance to its insurance policies. In 2015, Symantec, one of the leaders in cybersecurity protection, reported that cyber phishing attacks targeted small businesses 43% of the time and that there is a 50% chance that large companies will be the victim of a cyber crime. In today’s ongoing technological advances, we need to be equally careful with our cyber protection and there are a couple ways to do this:
- Take preventative safety measures;
- Create a safety plan in case of a cyber attack; and,
- Transfer the risk by purchasing a cyber liability policy.
Cyber liability includes financial coverage for both first-party costs, direct costs for responding to a cyber hack or security failure, and third-party costs, which is when people sue or make claims against you. Let’s take a closer look at what these costs include:
- Legal defense.
- Regulatory fines and penalties
- Settlements, damages and judgments
- Cost of answering regulatory inquiries.
- Loss of business.
- Investigation and remediation of cyber breach
- Public relations costs associated with cyber attack damage
- Legal advice regarding your company’s notification and regulatory compliance
- Notification costs of communicating the breach.to clients
- Credit monitoring to customers
Cyber liability policies can be written as a stand-alone policy or as part of an existing policy. Whether large or small, businesses should check to make sure they are covered adequately and stay safe.