Posts|June 29, 2022
Cyber Insurance–Something you need to consider
By Jeff Cavignac
President CPCU, RPLU, ARM
Our job as a risk advisor is to analyze a company’s operations to determine what could go wrong. 10 years ago, Cyber Insurance wasn’t even on our radar, but today every business we insure, regardless of size, needs to consider the coverage. When a criminal infiltrates your network or steals your data, you can incur significant costs. This could come in the form of data restoration, extortion fee, or liability to third parties if their data which was in your system is compromised.
Many small companies falsely believe that they wouldn’t be a target for a cyber-crime due to their size. In fact, small businesses are often the target of creative cyber sleuths. Smaller operations are easier targets since they are less likely to have a strong defense. A recent report by Verizon found that over 60% of all cyberattacks were committed against a small business. The average cost of a cyber claim according to the internet security firm Kaspersky Labs is $86,500.
Cyber Insurance can cover both first party costs and third-party liabilities. First Party costs include things like ransom payments, hiring experts to investigate the breach and assist with regulatory compliance and breach notification costs. Another first party claim that can be covered is social engineering. This will cover costs if an employee sends company funds on the basis of fraudulent instructions. Third-party Liability pays for legal defense costs, settlements, judgments and other court costs. In addition, the 24-Hour Cyber Hotline, that many insurance companies make available to their policyholders, is a hugely valuable resource in the event you are attacked.
The good news is that Cyber Insurance is relatively inexpensive. A $1,000,000 policy for a small company should run between $1,500 to $5,000 depending on the nature of the business. Even if you don’t ultimately purchase Cyber Insurance you should request a Cyber app from your insurance broker and review it. This will enable you to evaluate your current policies and procedures when it comes to Cyber Protection. Regardless of whether you purchase the coverage or not, this is an exposure that lends itself to being managed.
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