Kelly Insurance Agency, located in Trappe, PA, is urging local businesses to add Cyber Insurance to their business insurance policies. Even small companies are becoming targets as cyber thieves target smaller businesses that may not have the proper fire walls and malware protection. Even small businesses often handle customers’ private financial details such as credit card numbers, financial and banking information and possibly even social security numbers.
Cyber liability insurance should considered along with other business insurance coverages and is often bundled with business crime insurance. Business crime is usually the direct theft of funds whereas cyber liability covers both liability and financial losses resulting from data breaches. Unfortunately, these breaches are often caused by employees and training will not always be able to mitigate the risk. Even the best and more trustworthy employees can cause data breaches through neglect or ignorance on their part such as accidentally accessing malware.
Losses are typically grouped into two groups – first party and third party. First party losses are those sustained by the company itself. Some examples are if the loss of data results in loss of income due to business interruption, extra expenses or fraudulent transfers. The extra expenses are usually in the form of hiring experts and consultants on how to reconstruct the data lost. Another first party cost is the notification costs if a business must set up a call center to notify customers or offer extended credit monitoring services. Extreme examples are cyber extortion or the need to hire PR and marketing firms to restore a company’s reputation or crisis management.
Third-party coverages typically cover losses due to claims made against the company. Customers may sue for damages resulting from fraudulent charges or their data being made available online. Other liabilities may be any slander, copyright infringement or defamation resulting from someone having access to the company’s system and controlling their public owned media outlets. A final example of third-party is when errors or omissions were made during professional services. This is similar to the business insurance policies taken by consultants, architects and other skilled professionals.
Cyber liability getting trickier and trickier as cyber thieves are constantly learning new ways of infiltrating systems. Companies have no choice but to conduct their business electronically and over the web. While not all companies would need every part of coverage of these examples, Kelly Insurance Agency does recommend adding some sort of cyber protection into their overall business insurance coverage.