Insidious and unseen, it seems that everyone is on the lookout for a virus in 2020. The world’s anxiety level has reached new heights this year with the novel coronavirus making headlines. ”Social distancing” and “self-quarantine” are the new buzzwords of 2020 and for good reason. The virus has affected every business in at least one way and if you had told a business there was a way to mitigate this risk a year ago, every one of them would have taken it.
This is surprising in that a different kind of virus is consistently overlooked when businesses are looking for insurance. In 2018, cyber crimes caused over 2 billion dollars in damages for US businesses. Unfortunately, staying home can’t protect you from this unseen threat. Spending large amounts on network security personnel can mitigate some of your risk, but what if they fail?
A Typical Insurance Policy Does Not Provide Cyber Coverage
Your typical general liability policy does not provide cyber insurance or any coverage for cyber threats. Your property policy protecting your computers from physical damage is not going to be any help in most cases. If you are a small business owner, you may have coverage on your BOP or Business Owner’s Policy. If you do have coverage there, it is typically in very limited amounts. In the event of a major claim, you are going to want to make sure you have a cyber policy in place.
You have acknowledged the dangers of not having a cyber policy and now you are looking to purchase one. Know what you are buying. Not all cyber policies are created equal and the type of coverage you obtain should reflect what your business operations expose you to. Regardless of your industry, it is recommended that you obtain a robust cyber policy that mitigates seen and unseen risks.
There are two types of coverage in a cyber liability policy, and it is important that you have both. One covers you for 3rd party liability and one covers 1st party liability. Policies can be written separate or together, so having your agent confirm both are on a policy is a priority.
Example of a 3rd Party Liability Situation
A staffing agency has thousands of applicants every year. They store personal information on company servers so they can provide the necessary information needed to their clients, as well as have the information on hand when trying to place a candidate with a company. The server is infiltrated and that personal information is stolen.
If you have third party liability coverage, then the cost of notifying the individuals that their personal information was leaked would be covered. With something like a staffing agency that has thousands of people’s personal information, this would be important. The cost of doing this out of pocket could be up to $300 per person.
Example of a 1st Party Liability Situation
A pharmacy uses their computer system to keep track of their client’s orders. They have a big screen with each order posted for the employees to fill next. A hacker infiltrates their system and locks it down. When they come in the next morning the TV screen is just a timer counting down with a link at the bottom. The link says pay this account $100,000.00 by the end of the timer or we wipe your system of all information.
If you have the right first party liability coverage, then this claim would be covered. Every coverage responds to claims differently. Some may have technicians that can troubleshoot the problem. Asking your agent how your policy would handle these claims is important.
These examples are just a couple of the many risks associated with our technology and computer systems. If you are concerned that your technology may be a liability to your company, please reach out so we can discuss the best options available for your business.
Article by Andrew Mudge
Andrew has been working with companies to solve complex issues in the financial, human resources and insurance space since 2014. He frequently works with manufacturing, oil and gas, assisted living and contractors, but is comfortable with all types of businesses.
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