When
watching the news, it is commonplace to see issues with cyber security.
Companies of all most every size are having
to rethink their cyber security protocol, as there are incidences of cyber
theft very often. Having insurance coverage for this type of risk is essential
for companies these days, as they need to protect themselves in case of a
first-party or third-party exposure of information to their database. Cyber
insurance policies give the companies protection from liability claims.
What is Cyber Insurance
for?
When a
business’ database is hacked, the information stored on its network is at risk
of being stolen, sold or used. Whether it is credit card information or
personal information, if this data is breached, it will put a business at a greater
risk of various liability issues. Cyber insurance gives coverage to protect the
costs associated with the aftermath of a cyber
attack, such as lawsuits. Due to the fact that different companies offer
different coverages, what is covered or not covered can vary significantly from
carrier to carrier, from state to state.
Is Cyber Insurance Worth
It?
Due to the sudden
rebirth of this type of policy, cyber insurance has now turned into something
that all companies should have; large or small. Overall, there has not been
very many claims made against the policies as of yet, but it is steadily being purchased,
especially after some of the very big headline-grabbing data breaches of
Target, PF Chang’s, and Home Depot.
One case
that has been very interesting to follow is the one that involves Travelers
Casualty & Surety Co. of America. Their policyholder, Alpine Bank, hired a
web designer to redesign their website and maintain their server.
Unfortunately, hackers were able to breach the website and, therefore, customer
information. This left Alpine Bank with some significant cost in letting all their
customers know about the security breach. They filed a claim against their
policy and the insurance carrier then sued the designer. This is one case that
is sure to be watched carefully for the result.
How Should a Company
Protect Themselves?
With the
speed in which technology is evolving, online criminals are only getting more
tools to do more damage. This makes cyber security essential in this day and
age. However, since all policies are not created equal, it is important that
you take two essential steps to find the
right policy. First of all, you want to be sure that you take the time to
evaluate the different policies that are available. Look at the declarations
page and ensure that you understand exactly
what is being covered and at what liability limit it is being covered up to.
Secondly, be
sure that if there is a breach, you give written notice immediately, as not
notifying the insurance company as soon as possible can lead to claim denial.
Today, cyber
insurance is not required by the Federal or State government for a business to
purchase. However, with the many data breaches that have occurred within large
and small companies, it is important that a company ensure they are covered.
Liability costs can quickly add up, but the right insurance policy can cover a
large portion of the costs to keep your business afloat financially. Compare
and contrast different cyber insurance policies to find the one that is right
for your company and your particular needs.
