With the increased use of technology by both small and large companies, the vulnerability of cyber security threats is on the rise. A data security breach can not only result in a significant out-of-pocket expense if not properly insured, but also a hit to your company’s reputation.
The purpose of cyber liability insurance is to protect confidential client information, such as social security numbers, credit card numbers, drivers’ license numbers, financial information, etc. Companies that have client and/or employee databases with the previously mentioned information should strongly consider cyber liability insurance.
The majority of traditional liability products do not include “cyber” liability. Cyber liability is purchased in addition to standard business liability insurance. Many businesses believe that their existing insurance policies are enough to cover their data security exposures; however, many policies address only specific exposures with dedicated limits.
Why should you consider liability insurance for your business?
Within the last year hundreds of millions of records have been affected, and reports of data security breaches are dramatically rising. Additionally, any size or type of business may be targeted. Cyber criminals do not discriminate where or who they steal information from. If your company has information that may be of value, consider your company a target.
Other important information to consider about data breaches is that the culprit is often someone within your business, in fact, many security breaches are performed by insiders. Whether an insider or not, perpetrators can commit this type of crime from anywhere in the world. Just as these criminals do not discriminate who or where they steal from, they also do not discriminate what size companies they steal from – large or small your company is still at risk.
When debating whether your company should have cyber liability protection, consider the loss:
If you have ever received notification that your personal information is at risk due to a security breach this is likely because many states require companies to notify their customers and correct the situation if a breach is even suspected to have occurred. Notifying and protecting customers is NOT cheap! It is estimated to cost up to $30 or more per customer. Also consider the damage to your company’s reputation if a breach were to occur. A negative impact on a company’s reputation not only causes a loss of confidence by customers and potential customers, but also impacts shareholder value, corporate stability and financial performance.