Online Data sharing and storage has made it extremely convenient for professionals to work for clients across the globe. While it facilitates you to work from your comfort zone, it comes with its share of risks. Professionals with clients’ financial data are targets for malicious software attacks and data breaches. At times, the data breach could also be a result of a human error from your end. Such incidents can put tremendous monetary pressure on your firm in terms of fines and lawsuit settlements. There are two major types of cyber insurance protection provided by companies. Let us understand both of them in detail:
Cyber Liability Insurance
Cyber Liability Insurance is a must for professionals who keep their client’s data on their computers, smartphones, or office files. It protects you from the fallout of cyberattacks and hacking threats. Insurance cover will help you minimize the disruption whilst a cyber incident is going on and after the attack. It also helps you cover the cost incurred on dealing with the attack and for the recovery. The insurance can also help cover privacy investigations or lawsuits after a cyberattack.
Data Breach Insurance
In case a hacker breaks into your Server or network and steals your client’s data or one of your employees accidentally sends data to the wrong client. The phone or laptop with the data may also get lost compromising your client’s data. In such cases, Data breach coverage helps you pay for the damages.
What are some major Cyber Security concerns?
It is important to understand the various types of online threats as instances of cybercrime are getting very common. Some major cyber security concerns for which cyber insurance is available are listed below:
- Hacking and Data theft
As a professional, you have access to clients’ confidential data such as their tax returns, Social Security details, W-2 forms, financial statements, bank details, etc. Cyber criminals may hack into your network to steal such crucial information.
- Ransomware
These are malware that put encryption on your network or System preventing you from accessing your data. They demand a ransom in return for your data and can also start to delete your files.
- Electronic interference
These are attacks that create interference with your server or network resulting in downtime. Such attacks paralyze your work as you cannot access your files for work until the issue gets resolved.
- Data breach
It is an incident when information stored on your system or network is taken without your knowledge or authorization. Sometimes an employee may accidentally send the information to the wrong client which also comes under data breach.
When you use a third-party company’s services for data storage and a data breach occurs, you can also be held responsible sometimes. At times, you can be sued for data breaches caused by third-party companies. State and Federal penalties for a data breach can range up to $250,000. Your clients can also sue you for damages up to $25,000. If held responsible, there are provisions of jail time of up to 10 years as well.
Who should consider taking Cyber Liability Insurance?
Cyber Liability Insurance and Data Breach coverage help firms and professionals prepare for, respond to, and recover from cyberattacks. You should consider taking these insurances under the following circumstances:
- If you receive, collect, store, transfer Personally Identifiable Information (PII) or other financial information of your clients.
- Industries such as Healthcare, Education, and Finance have specific rules regarding customer information. If you work in these sectors, not having cyber insurance can have serious repercussions in case of a cyber attack
- You have confidential information and important data stored on your server, network, system or cloud.
How does Cyber Liability Insurance protect you?
Cyber Liability Insurance provides cover against the cost that an organization had to put in to recover from a Virus attack, Ransomware, or other cyber attacks. Some damages and fines that Cyber Liability insurance help you pay for are:
- Legal services for complying with State and Federal regulations.
- Expenses incurred on alerting affected clients.
- Ransom money paid in exchange for recovering locked data.
- You get cover for Income losses from network outages due to a cyber attack.
- Help to pay for lawsuits from clients or employees for the data breach.
- Help to pay the fines to State and Federal agencies.
- Expert Audit cost for Computer Security breach
How does Data Breach Insurance protect you?
Data breach insurance coverage protects organizations in the event of a data loss. The data breach may happen as a result of hacking or poor cybersecurity procedures. Following costs can be covered if you have comprehensive Data breach insurance:
- Cost of notifying your client about the data breach
- Extortion coverage add-on covers you for the amount you paid as ransom to recover your data.
- A First-party breach endorsement add-on helps you pay up for clients’ data breach if it is caused directly by you or your employees.
- Extra expense coverage helps recover some lost income
- Prior acts coverage add-on can help cover a breach that happened before the policy date.
How much does it cost to take Cyber Insurance?
Some businesses are more susceptible to cyber threats than others so the cost of Cyber Insurance varies a lot. Besides the type of business, a variety of other factors influence the cost of your Cyber insurance. These have been listed below:
Number of clients – The number of clients is directly proportional to the amount of stored data and the number of stakeholders. Generally, the more the number of clients, the higher will be the cost of insurance.
Type of data – The cost also depends on the nature and sensitivity of data stored by you.
Revenue – Your firm’s total revenue may directly impact the cost of insurance.
Claims History – Earlier cyberattacks and claims can also affect the quoted price for cyber insurance.
Damages not covered under Cyber Insurance plans
It is very important to know that Cyber insurance plans are very specific in nature. They only cover the nature and extent of damages as stated in the agreement. They do not provide umbrella protection against every online threat. You may need to complement your cyber insurance with some other business insurances as well to get a comprehensive cover. Let us understand some aspects not covered by cyber insurances:
- You may need commercial property insurance to protect the physical locations and equipment. Physical theft of servers or System equipment may need separate protection
- It does not cover mistakes or omissions of your professional business services. You may need a separate Professional Liability Insurance for protection in such cases.
Mindaro is working hard to address and support all the needs of a small business’ safety by partnering with top tier carriers, providing affordable, easy, flexible and understandable commercial insurance policies that will help protect your business from the major risks out there. We support only 100% digital underwriting, leaving pen, paper and redundant communications in the past, positioning our customers happiness as our top priority. For more information, please visit us at mindaro.io