Common Myths about Cyber Risk Insurance
If your client is a business owner, it’s imperative that they be aware of the cyber risks their company faces. More often than not, cyber risks fall outside the realm of traditional liability insurance policies, making it necessary for companies to purchase a separate Cyber Risk Insurance policy. Surprisingly though, there are still business owners and individuals whom believe that they do not need this type of policy, and it’s mostly because they don’t understand the risks involved. In fact, in one report issued by the U.S. Department of Homeland Security, the agency found tremendous misunderstanding among small tech firms when it came to cyber threats and insurance.
If your clients don’t understand the risk, they can’t adequately protect themselves or their business against it. So here are some common myths, and the truth behind them regarding cyber risk insurance. This may help clarify the importance of cyber risk insurance to your clients.
Myth #1: I don’t need cyber risk insurance because I’m already covered.
Your client might already have a number of policies in place to protect their business, such as Professional Liability and General Liability, however these policies are not enough to cover against the specific threats and losses associated with cyber risk, which may include:
- Invasion of privacy
- Data tampering
- Business interruption
- Data or systems loss
- Cyber terrorism or extortion
Myth #2: A data breach will never happen to me.
According to statistics compiled by the Privacy Rights Clearinghouse, more than 533 million data records of U.S. residents have been compromised due to data breaches since 2005. Other findings from these statistics acknowledge that more and more high-profile companies are targeted, but this audit also demonstrates that small business attacks are on the rise.
Myth #3: I can cover the damages of a data breach myself.
There are a wide range of potential costs involved with data breaches, including regulatory costs, the cost of monitoring data accounts, business interruption, cyber extortion, and legal defenses for third party lawsuits. There is a lot more at stake for your client’s business than just the measurable assets of dollars and data. Data breach studies conclude that companies are hit hardest by lost productivity and damaged reputations.
Myth #4: I’ve increased security measures, so I don’t need data breach insurance.
In a recent study, only 45% of its respondents felt that employees understood data security policies. Security measure can only be as effective as the people responsible for them.
At PLRisk, we know that all industries and companies could face the risk of a privacy or network security breach. Our coverage is the solution to helping your customers manage and protect against this risk. Please contact us at (855) 403-5982 for more information.