Cyber Security and Data Protection Insurance

By on October 8, 2018

Individuals are not the only ones who can benefit from some sort of identity theft insurance policy attached to their personal homeowners or renters insurance. Businesses are increasingly the targets of cyber security threats and fraud. Even the federal government and tech savvy companies have experienced attempts at hacking, corrupting or stealing important information and services.

In the modern wired world there is a new focus on widening opportunities for commerce, education and new business relationships through Internet communication and data-sharing. Unfortunately much of this sensitive information is transferred between computers without your complete control, opening opportunities for errors, negligence or attacks which result in damages seldom covered by your basic General Commercial Insurance (GCI) policy.

While most companies acknowledge that data security is their top business concern, few of them actually have a cyber security and data breach policy. Without insurance coverage, incidences of fraud will cost more time and money than you have available to restore your business’ credit and credibility, initiate legal action, recuperate financial losses, upgrade system or network defenses and much, much more.

Take steps to avoid thousands of dollars in damages. Reduce your risk of cyber security threats and data breaches which compromises the information stored by or for your business and its customers. A well crafted insurance policy can help ease the financial and emotional blow experienced by victims of identity theft and cyber security threats.

Cyber Security and Data Breach Insurance for Businesses

Tech companies, healthcare providers, retail store fronts and even government entities experience specific threats to their computer systems and online databases holding sensitive consumer or business information. A Cyber Security and Data Breach Insurance policy can be designed to address the exact online and information risks of any business in any industry. Just be sure to read the fine print of your policy to ensure you top security concerns are covered.

  • May address direct and indirect expenses lost or spent responding to an attack with security professionals, upgraded systems, notification letters, credit inquiries, public relations, etc..
  • Policy providers often include contact information for professional services to quickly restore daily business’ operations and replace security features
  • Includes coverage for at least some of the expenses used for legal defense against lawsuits initiated against your business
  • May include risk management and procedural commitments to improve internal skills and security

The benefits of a robust cyber security or data breach insurance policy are two-fold. First of all, insurance coverage reduces the potential financial fallout from cyber security attacks by reducing the risks associated with the from cyber-attacks. Secondarily there are immediate security solutions offered with immediate technology solutions and best practices.

Most Cyber Security and Data Breach Insurance providers request holders buy 2 types of coverage: first-party and third-party. First-party coverage is more often beneficial to your average customer-based businesses whose top cyber security threat comes from storing consumer information (names, credit card information, health records, etc) using an offsite data storage provider such as DropBox, Google Docs and Microsoft’s SkyDrive. While tech companies (such as the aforementioned cloud storage providers) with complex data operations and privacy liabilities require additional third-party coverage to protect against losses associated with the failure to prevent a virus, sending a virus, the exposure of a client’s private data to outside parties, and similar events.

1st Party Coverage Typically Offers:

  • Direct Liability Coverage for immediate expenses accrued as a result of the breach (ie. fraudulent purchases or transactions)
  • Legal counsel for initiating investigations, addressing liabilities and answering lawsuits
  • Computer Forensic Investigation services to determined how a breach occurred and gather evidence for any legal actions
  • Updates to computer networks, systems and online operations to protect against future attacks
  • Crisis Management or Public Relations services to alert affected parties, restore consumer confidence and restore daily operations
  • Social Media Security Coverage may be offered for activities, privacy breaches and risks associated with online social networking activities of a business

3rd Party Coverage

  • Coverage for legal expenses – civil awards, settlements and judgments which you are obligated to pay
  • Online or System Defense costs which are within limits – considering you may be a high tech company, your insurer may set limits on how much they are willing to spend on necessary system, network or application security upgrades.

While Cyber Security and Data Breach Insurance is likely to become standard in most commercial insurance plans, you can protect your business and manage the cost of premiums by education employees, updating systems and maintaining security controls. It’s important to note that all cyber security insurance policies are customized by insurance carrier to address your business’ specific data and privacy weaknesses. Consult with a trusted insurance broker to find the affordable coverage you need.

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About Scott Ho

FSN insurance and retirement journalist - Planning for your retirement or understanding your insurance needs can be confusing and difficulty. Scott knows these tasks can seem daunting. He offers his experience to make choosing insurance coverage and planning for your golden years a successful endeavor. Connect with Scott at !

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