There is a lot of yammer in business environments around the globe; regarding the saliency of Cyber Liability Insurance, basically should all businesses consider it a must or not?
Since any good discourse begin with some form of definition, lets define Cyber Liability Insurance. This type of insurance exists to protect a business’ in both liability and property loss instances that arise from electronic activities including but not limited to online sales or data gathering / processing across a digital network. Does that sound simple enough? I tried to simplify it, so it makes sense even if you’re not a digiphile, don’t have a degree in software engineering or work in the IT industry.
I could also simply describe it by pointing at “hot” headlines of data breach involving some retail giants that have suffered at the hands of hackers who stole millions of customer’s social security or credit card information from their “secure” internal network. You may have been affected so this may be even more familiar to you. Just think about how far we are all exposed, computers, wireless network, voip phones, credit or debit cards, online banking, smart phones, computer games that are always plugged in and of course the ever growing hot spots around town.
Ok now that you get the picture, let’s get back to the meat. A cyber liability policy will respond on your company’s behalf to pay for expenses related to such data breach. Just think about the costs you can wrap your mind around including notifying millions of customers, defending claims, and paying any resulting fines. Now pause, and also consider other long term financial commitments like identity theft protection for the affected customers that your company may be forced to provide in effort to clean up the mess and save your good name.
As you can imagine, the more you hear about this exposure the more you will hear about Cyber liability insurance but remember that every policy is not made equal. Don’t just get coverage for the incident, be sure to include additional coverage for penalties and fines as well as if possible always cover defense costs outside of the policy liability limit because those costs are inestimable depending on the gravity of the breach.
If you already bought a policy take another look or have your professional confirm that you have coverage for property losses including business interruption and data loss.
The only time I can think of that a business won’t need cyber liability in our new e-commerce world is my grand mother’s farming operation. She plants during planting season and sells during harvest season in a market place. Does not own or use any plastic mode of payment or transact over the web. She does not store customer information and does not have a phone, so…..the only way I can think to end this colloquy is to quote Williams Edwards Deming; a renowned American statistician who said “In God we trust, all others bring data”… in my translation, In Grandma’s zero-technology business world, we trust, all others get data breach protection. Remember, insurance can not prevent, it simply keeps you from going out of business by helping you and your affected customers recover.
I am confident that in the not too distant future most business policies will provide an endorsement for limited cyber liability coverage; but until then, if you need help getting a balanced Cyber Liability policy for your company, reach out to the experts on my team at http://www.alphadrct.com or call our flagship office in New York City at 212-568-5700. Let us tailor a cyber liability policy with adequate limits that match your industry and size of business.