27 Apr Does my business need cyber liability coverage?
By: Trae Norrell, Producer
I am often asked about cyber liability coverage and how to protect a business from cyber-attacks and data breaches. I always offer two solutions. The first is simple: do not use the internet for business activities. This is considered risk avoidance. Unfortunately, this is easier said than done in this day and age. More than 90 percent of operating businesses do NOT have that luxury.
The second solution to minimize cyber exposure and attacks is cyber liability insurance or liability transfer. Most businesses operating in 2020 that handle any type of personal information, including names, addresses, credit card, social security numbers, etc., need cyber coverage to protect them from cyber events.
What is cyber liability coverage?
Simply put, cyber liability insurance covers the cost for a business to recover from a data breach, virus, or other cyberattack as well as any legal claims resulting from the breach. Cyber insurance has two categories: First-party and third party.
First-party cyber insurance covers your business and its data. For instance, if you experience a ransomware attack on your technology, operating systems and data, that is considered first party. That includes ransomware, notification costs, wire fraud, and any associated legal fees. Third-party cyber insurance covers any damages that would arise from any cyberattack that affects someone else and leads to a settlement or exposure of others’ information.
Does my business need cyber liability insurance?
The short answer is yes. As technology continues to advance and businesses continue to grow, cyber insurance becomes increasingly crucial to protect businesses from cyberattacks and data breaches. As any business grows, its exposure to risk grows.
For instance, if I’m a trucking company with 3 trucks and grow to 30 trucks, my exposure to road accidents increases. Similarly, as businesses rely on web-based models to operate and handle more sensitive data, their exposure grows.
Recently, the COVID-19 pandemic has forced many businesses, retail stores in particular, to shift their operations to online and over the phone. This shift increases the amount of online billing and sensitive data that businesses deal with, which increases their exposure to cyber attacks or data breaches.
How does cyber liability coverage work?
When/if your business experiences a cyberattack, cyber liability coverage recovers the loss incurred from the attack.
For example, a well-known Alabama restaurant received an invoice via email from what appeared to be a vendor and routed $180k to the vendor to make the payment. Later, when the restaurant received the actual invoice from the vendor, they realized that they had fallen victim to a cyber attack. Fortunately, the restaurant had cyber liability coverage in place and was able to file a claim with their insurance carrier to recover the $180k within a few days.
To protect our customers from cyberattacks like these, we take a comprehensive approach to cyber liability coverage at Byars|Wright.
Learn more about cyber liability insurance from Byars|Wright in Birmingham, AL
When I first meet with a prospective cyber liability coverage customer, we ask several questions that start with the phrase “What would happen if…” I fill in the blank with several cyber event examples and talk through their different scenarios. From there, we put a tailored plan in place to ensure we are transferring the liability that needs to be transferred and putting the policies and procedures in place that make sense for the customer.
Has the COVID-19 pandemic forced your business to operate online? Does your business need a cyber liability coverage plan? Contact an agent at Byars|Wright today. Where Relationships Matter.