Picture this: you have worked an entire decade to grow your thriving business. It is your livelihood, your retirement plan and your child's college fund. To help you relate, let's choose a particular type of business to imagine - maybe you are a partner at a local accounting office. A few moments ago, one of your bookeepers called you in desperation announcing that their computer screen went blank and a message appeared stating that without the payment of 50 bitcoins, all access to client files would be blocked and the information would be completely destroyed. Your head starts to spin as you realize all the confidential information that your computer system holds. Social security numbers, phone numbers, financial information and addresses are just a few of the various stored information. Somewhere between sweating profusely and hyperventilating, you wonder if your commercial insurance agent ever told you about the possibility of something like this happening and more importantly, if you have a policy that covers this sort of business risk. For a brief second, the financial implications of a data breach happening, hits you like a ton of bricks and everything you've ever worked for flashes before your eyes.
If you reviewed my most recent article, insuring risks due to computers, was something not even in a business' vocabulary 20 + years ago. Somewhere in between insuring your business' employees and your physical property, this new risk emerged and it is most definitely here to stay. Cyber liability insurance is the type of policy that addresses these concerns and is also a very unique coverage in many ways, including the fact that there isn't a standard insurance form that provides coverage for businesses. In my experience, not one policy is the same. Instead, depending on the company used, you can choose from a plethora of coverages and limits - almost like a ala carte menu. So, with that being said, it is even more important to understand the type of exposures that affect your business the most to ensure you are selecting the right coverages.
What type of potential cyber risks could affect a small to medium-sized business? Consider these:
What would you do if one of your employees decided to insult one of your competitors on Facebook (something you don't have any control over) and the competitor sues your business?
How would you absorb the costs of not being able to perform your normal business operations because your website or an entire customer database is down?
How would you pay for the replacement of an entire computer system because it has been completely destroyed by a hacker and the advanced security that is needed to ensure it doesn't happen again.
If your customer's private information is breached, could you afford legal counsel, IT forensics, credit monitoring and public relations expenses (just to name a few)?
An employee is tricked into transferring funds to a third party. You provide sporadic emails to your accounting department to wire funds to ABC Company. One day, the accounting department employee receives an email that is slightly different from yours but doesn't notice and they wire the money any way. What would you do?
Large companies such as Target have a much easier time absorbing these risks. But, what happens to a smaller 50 employee company? It's much more likely to turn into financial devastation that can lead to the doors of their business being closed, never to be reopened again.
If your current insurance agent hasn't talked to you about a cyber liability policy, ask them why? Your education is vital when selecting the appropriate coverages for your business. If there's anything I can do to help before an anxiety attack occurs, feel free to contact me at 215-493-1996 ext. 223.