Cybercrime Is On The Rise—And Insurance Is Keeping Up
Dan Levenson July 12, 2016
Mark Patterson, owner of PATCO Construction in Sanford, Maine, is one business owner who learned the value of cyber liability insurance personally. Cybercrimes committed against businesses like Patterson’s are on the rise, and he learned first-hand the value of insurance to protect against the crime.
Luckily, insurance is keeping up with this rise.
Patterson found out his company’s firewalls and anti-virus software did little to protect his small business as criminals hacked its email system and ordered money transfers from its bank account.
“Over the period of five consecutive nights, excluding weekends, $100,000 a night had been taken out of our checking account, and we were down about $545,000,” he remembered.
An additional problem was that his bank wouldn’t reimburse him. Although he finally won in court, most of the money he won back went towards legal expenses.
He then bought cyber liability insurance.
What Does Cyber Liability Insurance Cover?
There is insurance available for every industry and even public entities. Cyber liability insurance for technology companies covers:
- Errors and omissions (E&O) insurance covers losses suffered because of an error, negligent act, or omission caused by a company’s work or product.
- Network and information security liability coverage protects against the failure to prevent transmitting a computer virus, as well as failure to provide access for a customer to an authorized policyholder’s website or communications network. In addition, it protects against claims when there has been a failure to prevent unauthorized access
- Communications and media liability coverage protects against infringing on slogans, trademarks, copyright, titles, service marks, trade dresses, or service names. In addition, it protects against plagiarism and the unauthorized use of advertising material.
- Employed legal professional liability protects corporate responsibility to risk management while a technology company grows.
- Expense reimbursement coverage provides reimbursement for the victims of computer fraud, extortion, illegal funds transfers, telecommunications theft, security breaches, and more.
Public entities can also buy insurance that will protect them in case of exposure to:
- Personally recognizable information about others, such as Social Security numbers, driver’s license numbers, dates of birth, email addresses, and credit card information.
- A website or computer information system.
- Smart phones, laptops, and other communication devices.
- Public employees, when they accidentally or intentionally release confidential information, which is then used for criminal purposes.
What Are The Risks Of Cybercrime?
Businesses are affected in a big way when they are the victims of cybercrime. For example, if a small business has a data breach, it can cost hundreds of thousands of dollars to recover losses, not including legal fees. A business could have to notify its customers of the breach and provide them with credit monitoring services. In addition, it would be difficult to repair the business’s image and relationship with customers.
The right insurance can provide money for:
- Expense reimbursement.
- Employed legal professional liability.
- Business reimbursement, such as the cost for additional staff, use of third-party services.
- Customer credit monitoring.
- Legal and forensic services.
Not having these insurances can cripple a business and force a small company to close. If you have any questions about cyber liability insurance, feel free to contact us.