Cyber Insurance

Are You Covered? Do You Need to Be?

by Scott Lewis

Cyber Insurance: what is it, do you need it, and how will it protect your business? These are becoming all too common questions that I get when I speak around the country. Business owners are very concerned about the electronic frontier we now live in and the liabilities that we all face because of it.

Let’s start at the beginning. In a nut shell Cyber Insurance is designed to mitigate losses from a wide variety of Cyber and electronic intrusions, such as data breaches, business interruption and going as far as covering network damage caused by virus or malware. Cyber insurance can mitigate or limit a very wide range of risks and help you improve your prevention practices with the advantage of being very flexible and customizable to meet your businesses specific needs and risks.

Now that we generally know what it is and what it is designed to do we ask,”What does Cyber Insurance cover?”. Cyber Insurance can be designed to meet your specific needs and cover specific goals. First you need to take a look at your business and evaluate your individual risks and exposures, so that your Cyber insurance plan can be designed to cover those particular areas. Some of the areas covered by Cyber Insurance are Identity Theft, Computer Virus Damage, Security Breach Liability, Website or Email Libel or Slander, Crisis Management Expenses, Computer Program and Electronic Data Restoration Expense, Business Interruption and Computer Fraud just to name a few.

Cyber liability insurance is really designed to protect against two types of risks - first party and third party risks. Some of the first party covered items are typically items like hiring a public relations company to manage the media and customers, forensic costs, and the costs around the repairing and restoring of networks and computing systems. Third party risks exist for any business, especially if you collect medical information, financial information, credit card numbers or Social Security numbers. Cyber liability insurance could be important because now most states have data breach notification laws on top of a number of federal regulations that are all potential claims.

Businesses continue to count on firewalls, SPAM and Malware filters and virus protection that they have already invested in as protection. According to Brian Burkbuegler at the Crane Agency many business owners see Cyber Insurance as a luxury when in fact in today’s connected world it is becoming more and more important for all businesses to explore Cyber Insurance. Due to the rise in Social Media, the vast use of Internet technologies and bring your own device to work policies mitigating risks around privacy, security, intellectual right ownership and employment practices is becoming mission critical to all businesses.

So do you need Cyber Insurance? The first thing I hear is that we are too small and this type of insurance is only for big companies. The truth is that in today’s business world Cyber Insurance makes sense for companies of all sizes, but one of the reasons smaller companies don’t have Cyber Insurance is because they think it is too expensive. However, you can get a policy starting at $150.00 dollars a month depending on your risk and exposure. Many business owners also think that their general business liability insurance will cover them, when in fact most general policies exclude cyber losses due to the Internet connectivity. Another reason I hear why companies don’t need Cyber Insurance is because the IT guy is taking care of our Firewalls and routers and other protections we already have. Although we want to believe our employees are always doing the right thing, your insurance company can help you fill the gap on what potential risks you may face like social media risks and bring your own device to work risks to better help you protect your data and your network.

You are responsible! Yes, even if you host your website or have your data in the cloud, you are still responsible for any data breaches, lost data, and most cloud providers do not cover things like business interruption or downtime associated with virus and malware issues. There are many different types of cloud and hosting providers and you can’t control how they manage their security and protections so if you are hosting in the cloud a Cyber Insurance plan may be worth your time to investigate.

Cyber Insurance policies come in many shapes and sizes so it is important to work closely with your insurance carrier to determine what type of coverage best fits your business. We now live in a world where electronic documents and storage of personal information is all electronic. Cyber Insurance is simply becoming part of doing business and running a smart business.

Scott Lewis is the President and CEO of Winning Technologies Group of Companies.  The Winning Technologies Group of companies is an international technology management company. Scott has more than 30 years of experience in the technology industry, is a nationally recognized speaker on technology subjects such as Collocation, Security, CIO level Management, Data and Voice Communications and Best Practices related to the management of technology resources.  Learn more about Winning Technologies at www.winningtech.com or call 877-379-8279.