Cyber liability insurance is a new and highly beneficial insurance product available through Sunforest Transportation Insurance Group. It is designed to protect your company’s assets by helping to cover the costs associated with a security breach. You’ve probably heard of the massive hacking of Target stores’ credit card data or of Anthem Health Insurance’s recent customer data breach. It’s not just large retail businesses and government institutions that are risk; breaches can happen more often than you might expect, and every business that uses a computer network for maintaining information or conducting a transaction is at risk.
Today’s business enterprise uses its computer network in nearly every facet of daily operations. Most companies maintain sensitive information about their employees, their customers, prospects and suppliers. If there is a data breach, access to confidential personal information, such as social security numbers or credit card numbers, can be obtained by cyber criminals.
A cyber liability insurance policy can help protect your business by covering some of the costs involved if the unthinkable happens.
You need cyber liability insurance because this emerging style of crime puts your company at financial risk every day. Prudent risk management dictates the necessity of having a strategy in place for this eventuality. When your system is breached and your information is no longer secure, the resulting costs can be tremendous. The cost per customer record can be $200. Even with just 500 records, you’re already spending in excess of $100,000. And this cost does not include costs associated with rebuilding your business’s reputation, any class-action lawsuits, or regulatory fines and penalties.
- Notification Costs - These expenses mount up quickly!
- You have both legal and ethical obligations to inform your customers and the public that their information is at risk. In most cases, this needs to be done via first-class mail. Besides the cost of the time it takes to write up notifications, there are also stamp, paper, and employee costs.
- Forensic Costs
- On top of the costs for notifying victims, you must also investigate to determine how the data breach happened, how much damage has been done (including who has been affected), and what additional risks exist. Doing so requires digital forensics specialists, and specialists are costly.
- Business Interruption
- If your computer systems are crippled, so too is your business. No matter how well you handle business communications in a matter such as a data breach, this communication will be costly. For example, you may have to set up a call center or website to help keep victims informed. There is additional communication needed for employees, media, and stakeholders.
- Revenues are lost forever. It’s hard to calculate the amount of money you lose when there is an interruption in business due to a data breach. Many customers will go to a competitor, but it’s difficult to determine how many you lose that way. Overall, in most cases, it is costly to rebuild a positive reputation for your business.
- Credit Protection
- In a cyber information breach, your company will be financially liable for the credit monitoring services your customers will require. This can average $10 per month per victim and may be required for up to two years.
- Crisis Management Expenses
- Not only will you spend a lot of time researching and hiring the right public relations contacts, but the public relations fees themselves are costly, as these experts work to reestablish your business's name as a credible and reliable institution.
- Cyber Extortion
- Besides all of the other costs, another one that businesses don’t always consider is that when a hacker gains control of your information, he may hold the information hostage, meaning that you may have to pay to get it back. This ransom can cost hundreds of thousands – sometimes millions – of dollars.
If a cyber disaster struck today, would your company be able to underwrite the aforementioned expenses out-of-pocket?
You wouldn’t dream of owning a home uninsured for a fire loss. Similarly, it is highly imprudent to go without this new and valuable coverage that can help prevent your business from ‘burning down’ due to a cyber breach.