If you’ve listened to the news lately, you’ve probably heard something about cyber attacks affecting large companies around the country. Some of the more recent cyber crimes you may have heard of include the Colonial Pipeline shutdown, McDonald’s data breach, and the JBS Meatpacking Company ransomware attack.
Despite all these reports, the media often fails to portray that cyber threats aren’t just affecting large corporations, but also small and medium-sized businesses as well. In addition, cyber attacks don’t only happen to businesses who store company and client information on the internet or in the “cloud”.
Recently, one of our clients was the victim of a cyber event, and it didn’t even involve the internet or an online hack of any kind. In this unfortunate situation, our client’s office was physically broken into, and among the numerous items that were stolen were laptops and hard drives containing client information.
While the stolen property was covered under the client’s standard Businessowners Policy (BOP), the data that was on the laptops and hard drives triggered a separate cyber event. In the state of Colorado, businesses are legally required to notify customers if any form of data breach takes place. Because the laptops and hard drives contained customer information, our client was now responsible for notification and monitoring services for all of their customers.
Fortunately, our client had a Cyber Liability Insurance Policy. This coverage handled the logistics and costs associated with the notification and monitoring services for all clients who opted for protection.
This service alone can cost $80+ per breached record, which will add up very quickly if you have a large amount of client data. In addition, this policy helps cover attorney fees associated with seeking legal advice or defending against any lawsuits that may arise.
If this company didn’t have Cyber Liability Coverage, this is an estimation of costs they would have faced:
Notification and Monitoring Services: 1,750 Client Records * $80 = $140,000
Attorney Fees for Legal Advice: $10,000 (this does not include any potential future lawsuits)
Total = $150,000
For many small and medium-sized businesses, a cyber event like this could result in a bankruptcy or permanently closing the doors if the appropriate insurance policies aren’t in place.
Regardless of the cyber and network security protocols your company has in place, cyber risks are becoming more and more common. There are new ransomware variants popping up every day, and as we have illustrated, some cyber events don’t even involve the internet or storing information online.
To learn more about Cyber Liability Insurance and how it can protect your business, fill out the form below.