Hacking and cybercrime are becoming more and more prevalent, as the news continues to focus on large companies that have had cyber losses. The sad part about this is this type of crime can happen to anyone, including small businesses. Cyber losses can cause monetary damages and lots of sleepless nights if a loss occurs. Unfortunately, the news doesn’t report on smaller companies that experience this. It’s up to us to let help our customers realize their exposures and make sure they are covered.
Your insured probably uses technology to track their company’s and clients information. Since this information is digitized and transferable through email or accessible on their network, it creates a substantial cyber risk to the company and the clients they serve. Network security and privacy losses related to viruses, hacking, digital defamation, and intellectual property infringement are common, and the standard general liability policy excludes data and privacy losses from a cyber-attack. Obtaining cyber insurance provides coverage in the event of a cyber-attack or data breach.
Cyber policies vary and are customized by adding or removing coverages based on the company’s risk profile. Cyber policies can respond to the liability, first-party direct costs associated with a cyber-event, and 3rd party losses if it is included in the coverage form. The liability portion of the policy responds to regulatory and administrative actions, including fines and penalties arising out of the event.
First-party costs can include notification costs, credit, and identity monitoring, forensic expenses, and loss of income from a network interruption. Third-party coverage provides liability coverage for businesses that are responsible for a client’s online security, including protecting clients from cyberattacks and data breaches. Some carriers will include risk management and loss prevention services, which aids businesses in assessing and mitigating their exposures to losses before they happen.
In reviewing coverage, it is essential to remember that not all policy types will respond to a cyber loss, and it is wise to offer your clients a stand-alone cyber policy. We offer a 3 hour CE course specific to Cyber coverages, and we will be sending out an invitation to this class soon!