The Importance of Cyber Insurance Coverage
Hackers have taken advantage of the COVID-19 pandemic and cybercrime is on the rise for businesses and individuals. Find out how you can protect your business and personal net worth with cyber insurance coverage.
Cyber-crime, email hacks, identity theft, and data breaches are increasing in recent years and rapidly changing the cyber insurance industry. Here are three types of insurance coverage that you should carry as a business owner in the era of COVID-19.
- Cyber Insurance
- Social Engineering Coverage
- Personal Cyber Insurance
Cyber Security Insurance for Businesses
Cyber insurance coverage protects businesses from a wide range of cybercrimes: malware and viruses, data breach of personally identifiable information, cyber extortions, email hacks, and more. These incidents are unique in that they can drastically impact both large and small businesses. Furthermore, small businesses can be at a higher risk of cyberattacks than larger companies that invest a small fortune in IT infrastructure and protection. If one of the three largest credit-reporting bureaus in the United States can be hacked, what does that mean for your small business?
There are three main cyber security insurance policies and coverage that every businessowner should carry.
1) Cyber Insurance coverage
This may seem like a no-brainer, but many businesses overlook the impact a hack can have on their income, business, and reputation. Cyber insurance coverage provides first party and third-party coverage for cyberattacks.
First-party cyber coverage pays for expenses and costs directly related to the data breach:
- Cost of notifying customers that are impacted
- Fraud monitoring services
- Professional cyber experts
- Business Interruption Expenses
Third-party coverage pays for the expenses from clients (third parties) that sue your company for failing to prevent the breach:
- Legal Defense
- Legal settlements and judgments
- Court Costs
2) Social Engineering Coverage
Social engineering coverage is vital to a comprehensive business insurance program. Many cyber insurance coverage policies either do not provide this coverage or limit the amount of social engineering insurance coverage. These provide protection for phishing scams and other cyber-attacks that involve manipulating employees to divulge confidential information or transfer funds.
Real Life Scenario: Shannon is the owner of a small business with ten employees. During COVID-19, they were able to transition to a remote work environment. It is common for Shannon to request wire transfers to vendors via email to her accounting department. Late on a Friday afternoon, an email comes in from Shannon requesting an immediate wire transfer to a vendor. The accountant transfers the payment of $17,000. Later, upon reconciling the accounting statements 15 days later, the vendor has no record of the payment. The employee finds out that a phishing email was sent disguised as a request from Shannon and the $17,000 is gone.
3) Personal Cyber Coverage
Unrelated to business insurance, home networks are often targeted with similar phishing and hacking attempts. As a business owner, we recommend Personal Cyber insurance coverage which can be added on to a homeowners insurance policy. This covers a wide range of cybercrimes including cyberbullying, online fraud, and cyber extortion.
Real Life Scenario: Mark works from home during the COVID-19 pandemic and is awaiting the appointment for his vaccine. He receives an email from a purported public health organization requesting that he click a link to confirm his registration. The link requests personal information, including credit card numbers and his social security card. They follow up with a call to confirm. Several days later, Mark finds that his social security number was used to apply for multiple credit cards and $15,000 was charged among three of his cards.
These are real examples of how cyber-crimes can impact your family, finance, and businesses. At Evarts Tremaine, we provide a wide array of cyber insurance coverages for your business. The best business insurance should include cyber security insurance. Contact us now for a complimentary review of your business insurance that provides security online and off.