In today’s world, every business needs to keep its digital information secure, available, and organized. We’ve seen an explosive growth in high-profile cyber incidents, such as computer viruses, data theft, identity theft and other cyber-crimes — and most if these incidents aren’t even reported!
What happens when you suffer a loss or breach of data? More specifically, what are the implications from an insurance standpoint?
Consider these scenarios:
- One of your employees accidently opens an e-mail that has a computer virus. The virus crashes the company’s network, but not before spreading itself to everyone in its contact list, including your customers. As a result, one of your customers gets the same virus, which wipes out his network — and leads him to sue you for damages.
- A disgruntled former employee logs into your network and blocks access to the company Web site, so that customers can’t access their accounts or do business. After two weeks, you’re still not operating normally — and you’re losing customers by the hour. What’s more, some of them are suing you.
- A virus hacks into your Web site, corrupts all of the content, and then e-mails a virus link to your customers. You rush to take the site down, but not before suffering extensive damage — not to mention the cost of rebuilding the computer network and site. Meanwhile, a number of disgruntled major customers have taken their business elsewhere.
What do these three scenarios have in common? Most Business Insurance policies wouldn’t cover the losses! The standard Building and Personal Property Form covers loss of data only up to $2,500 a year. Commercial General Liability (CGL) policies exclude both damage to data and that caused by loss of data.
According to the Cincinnati Insurance Board, most small businesses are woefully unaware of the implications of cyber threats. “Cyber losses are increasing, and the cost to recover from a data breach can be staggering,” says the Board’s EVP Ron Eveleigh. “At this time, coverage is limited for these cyber losses, but the coverage is evolving. Although some policies will provide limited coverage for broad data and privacy breaches, most CGL policies still need a specific endorsement for cyber losses.
Our risk management professionals would be happy to help craft coverage to protect your business against losses from cyber crimes.