Why You Need Privacy & Network Security Liability Coverage
All types and size companies are targets of cyber attacks today. Whether you are a large accounting firm or healthcare provider, a midsize law firm or a local commercial real estate agency, cyber criminals don’t discriminate. It may be the behemoth companies that make headline news following a hack attack, but statistics show that small businesses have become a big target for cyber criminals. In 2015, for example, phishing campaigns – emails designed to hijack an entire company’s financial information and gain access to funds and personal information – targeted small businesses 43% of the time, up 9% over 2014 and 18% since 2011.
Without the right insurance protection in place from PLRisk Advisors, the expenses that come with a data breach can be significant for a company to absorb out of pocket. These expenses include: the cost of forensic accountants/IT professionals to identify the scope of the problem, and can easily run between $50,000 to $100,00 for the simplest breach; the cost of notification to all parties affected which can include certified mail, and can reach up to $200 per record; the cost of personnel to field phone calls and letters; the cost of providing credit reporting services to those affected; and the marketing costs associated with defusing the situation and repairing a company’s image. It’s important to note that the cost of an uninsured loss is twice an insured loss.
The Value of Having PLRisk Advisors as Your Partner
It’s not only important to purchase a Cyber policy but also to have the right partner to guide you so that your insurance is responsive to your needs. We specialize in securing Cyber insurance for our professional clients and will look at a number of key issues when reviewing the type of policy you purchase, including:
- Whether the policy provides access to a Breach Response team and coach to guide you on what to do; help mitigate liability and further limit damages, which is critical in the first few hours of a breach; and hire the forensics team to ascertain the cause and extent of the breach.
- The wording of the policy when it comes to payments and timing. Cyber/Privacy policies can be a “duty to defend” or “pay on behalf of” policy. This is important since it will determine whether the insurer pays directly for the defense and indemnity or whether you have to arrange for and pay for your own investigation, forensics, and defense and then seek reimbursement from the carrier. Forensic professionals range from $600-$1,000 per hour.
- How penalties, fines, and assessments are defined and covered.
- Whether the policy will cover your data in the event it is housed by a third-party vendor and is breached.
- What sub-limits if any exist under the policy for first-party expenses (e.g. client notification, forensics).
- Whether business interruption coverage is included and the scope of the coverage.
- Encryption requirements by the carrier for coverage to respond, including for mobile devices.
- Whether losses as a result of social engineering are covered and for how much under the policy.