IPA 2021 Recognition & Awards
By striving to deliver the best insurance solutions to our clients, we have been recognized by several national and local groups.
Here are some frightening statistics.
- 74% of small and mid-size businesses were targeted for cybercrime
- 60% of small businesses will close within 6 months of being victimized by cybercrime
- 29% of data breaches happen from a laptop being lost or stolen
So why do 60% of small businesses close within 6 months of a cybercrime? It is because the costs associated with the crime are so substantial most small businesses cannot stay afloat. Insurance is a risk transfer tool. By purchasing cyber liability insurance you transfer the risk from your small business to the insurance company.
Cyber Liability Insurance
Protect Your Business from Cyber Liability
For the last five years, cyber liability has been at the forefront of insurance concerns.
Why should it matter to you as a business owner?
Any business that uses, collects, stores, or maintains any personal customer information, such as phone numbers, physical or email addresses, dates of birth, social security numbers, or bank or credit card
information, is financially responsible for the security of that data. That means if there is a data breach or
an electronic theft from hacking, you are liable for those losses as well as any adverse financial effects
that your customer suffers from the breach.
Cyber liability policies protect companies from illegal data breaches and the costs associated with these breaches, including customer notification costs, credit monitoring, defense costs, industry or government fines and penalties, and losses following any identity theft. Keep in mind that most insurance companies will no longer cover cyber losses and breaches under your professional liability policy. Without a separate cyber liability policy, your business will be held solely responsible for the costs associated with cybercrime.
Cyber liability policies also provide coverage for any liability that results from a company’s website content, as well as protection from any business interruption, computer fraud, IT system failures, funds transfer loss, data loss, and cyber extortion that may follow a data breach or cyber hack.
The reality of our modern business landscape is that data and information are the new currency. Cyber liability is a critical part of modern business insurance protection.
Here is what cyber liability can cover for you:
You have many choices when it comes to insurance so it’s important we set ourselves apart.
First-Party Privacy Breach Expense:
Pays your costs for notifications, monitoring, investigations and crisis management expenses.
Third-Party Cyber Liability Coverage:
Pays your liability to others due to a data breach within your business.
Regulatory Proceeding Claim Expense:
Pays fines and penalties assessed against you as a result of investigations into a potential data breach or violation of privacy laws.
First-Party Business Interruption:
Pays your business income loss and extra expenses sustained during the reconstruction period due to a cyber or data breach liability loss.
Don’t make the mistake of thinking you are already covered. The fact is, most general liability policies provide little to no
protection for cyber-crimes. This coverage must either be purchased as a separate policy or at the very least endorsed onto
the commercial general liability policy. At best insurance policies that do offer some cyber liability coverage offer a
minimum amount of $5000 to $10,000 of coverage. This is a fraction of what the costs could be to your business should you
be a victim of cybercrime. The cost to notify the person whose information was stolen or even possibly stolen and the cost to
monitor their credit reports for fraud can cost tens of thousands even hundreds of thousands.
Frequently Asked Questions
Every business that handles any personally identifiable information for its customers, conducts any part of their business or transactions online or provides any type of IT-related work for their customers should have Cyber liability insurance.
Having the latest IT security technology, firewalls and encryption will reduce the risks of a cyber-attack or breach. And there are additional ways to improve security and reduce human error through staff education and effective password policies. However, none of these protections can prevent all cyber-attacks or data breaches. Cyber liability insurance gives you the peace of mind to know you are protected. It will cover the associated costs of a cyber-attack, including privacy breach notifications, loss of income, recovery of network infrastructure, potential litigation and regulatory fines/penalties.
Many business owners believe that their cyber liability risks are covered by their professional liability insurance. While your current PL policy may give you some coverage, it is usually very minimal in comparison with the costs associated with a data breach. There are also often large gaps in coverage. For example, most PL policies will cover the computers themselves, but not the data stored inside them. Also, if your business is a victim of cyber-attack, your PL policy won’t cover the legal costs or interruption of business expenses.
Data stored in the cloud is technically off-site. When you store client information in the cloud, always ask the following questions:
- Will the information be encrypted?
- Have your clients provided their written consent to place their information in the cloud?
- Does the cloud provider have adequate security to protect the data?
Only use a cloud provider that can provide reasonable assurance that your customer’s data will be protected and understand what their liability is if there is a breach. Understand that there are still chances your business can be held liable for certain incidents. It will It all depends on the contractual agreement wording between you, your clients, and the vendors, which will probably be determined by a court. Cyber liability insurance will protect you for any legal costs you incur as a result of the breach.
This will depend on the type of business you have and the number of customers you have.
The average cost of data breaches is $195 per lost record. So even if you only have a few thousand customer records, a data breach could cost your business hundreds of thousands of dollars. It adds up really quickly. A million dollar policy covers about 5000 records. Be sure to talk to a reputable, knowledgeable insurance agent who really understands your business, to ensure that you get the right amount of coverage for your needs.
Hear What Other Business Owners Say
“Insurance Professionals of Arizona is always prompt at answering questions, and always look for competitive rates. Personalized service.”