Your Business Is At Risk And You Don't Even Know It!
Each year you spend hundreds, if not, thousands of dollars on business insurance but there's something you're missing! And guess what, the typical claim related to this risk had an average claim payout of $495,000....yes, you read that correctly, $495,000*! The median claim payout was right around $49,000*.
Now do I have your attention? Thought so....
Over 90% of business insurance policies our firm reviews (for a new business consultation) does not have this coverage and over half of those businesses never considered buying this insurance coverage mainly because they didn't know it was available or thought it was too expensive (guess what, it's not).
You've seen the news and you might have been a victim yourself - Target, Sony, Home Depot, etc. - the list goes on, but it's not just the large companies that are experiencing cyber breaches. 60% of small businesses that suffer a cyber attack go out of business within 6 months with about 4,000 businesses being affected each day*.
What Is Cyber Insurance
Cyber Insurance is an insurance contract that protects individuals and businesses from a data breach which exposes personally identifiable information (PII), personal health information (PHI) or payment card information (PCI). PII is information that can identity an individual with various pieces of information (i.e. full name, date of birth, location address, social security number, e-mail etc). PHI is typically medical history information, test/laboratory results, insurance information (basically anything your healthcare provider collects). PCI is information that links to your banking account such as a debit or credit card.
Breaches occur in various forms ranging from hackers, malware/virus, employee mistake/error, system glitch, lost/stolen laptop/phone and much more. Breaches can occur electronically (system breach via internet, e-mail etc) or hard copy files (employee or client records etc). Cyber Insurance is intended to assist with any potential cyber breach and there are numerous coverages you can purchase to protect you from various aspects of the breach.
Key Cyber Insurance Coverages To Consider
1) Cyber Incident Response coverage is considered to be one of the core coverages of cyber insurance. This coverage is to assist you with your response to the cyber breach such as security / forensic costs, legal / regulatory costs, post breach remediation costs and crisis communication costs. If your business suffers a breach you are required to notify basically everyone you do business with from customers to vendors and subcontractors - do you have the proper plan in place to swiftly and efficiently notify all of these parties of a potential breach? Do you have a plan in place to notify the public and to assist with some "good faith" advertising so your business doesn't suffer loss of future income due to clients becoming wary of your company's security. Once a client loses that trust, it's extremely difficult to gain it back.
2) Cyber Crime is a well educated and targeted attack, typically via email, by an outside party. The reason for the word "educated" is due to the fact that the outside party does their due diligence on your business and tries to learn your operating procedures so when they "attack" your business it does not appear to be "out of the ordinary". Cyber Crime occurs typically when an outside party emails an employee requesting funds to be transferred for a seemingly legitimate business transaction. The employee assumes the email is legitimate due to the outside party's attention to detail and wires money to the outside party and the money is then gone forever. The phrase "outside party" can appear to be a customer, vendor, or in some cases, a higher level employee. Usually this cyber crime doesn't occur just once as the outside party will attempt to exploit this same employee (or others) on numerous occasions. This exploitation of said employee will occur repetitively over the course of a week (or several) so the outside party can maximize the potential amount of money drawn as well as catch the accounting department "off guard".
3) (Full) Prior Acts coverage will extend the insurance policy (coverage) prior to the policy being purchased. The main reason this is a very critical addition to your cyber insurance policy is because most businesses that purchase cyber insurance typically don't buy it until many years after their business is open. Typically when you first open your business money is tight and I'm sure cyber security is at the extreme bottom of importance for your business. Obtaining full prior acts coverage ensure that your business is protected basically back to inception of you establishing your business.
Cyber Insurance is a cost effective way to protect your business from not only potentially a large claim / lawsuit but it also ensures that you don't have to shut your business down forever. Cyber Insurance policies are not all created equal so make sure when you are purchasing the coverage you fully understand what you are signing up for. A basic cyber insurance policy will cost you anywhere from $60 to $120 per month if you are a small business with low to medium hazard. Feel free to contact BSP Insurance today for a cyber insurance proposal!
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