Click Here for a Business Cyber Liability Quote Computers and the internet have revolutionized how we all do business.  In many aspects computers have enhanced your business or possibly created your business.  That’s all wonderful, but a major insurance issue has also been created.  If your business has any presence on the internet or has client sensitive records stored on your computer, a huge gap in your liability policies could exist. You might say my information is super secure so I don’t have to worry.

That’s what the state of South Carolina thought.  Per a November 20, 2012 New York Times article the state of South Carolina’s system was a victim of a cyber attack by international hackers.  The hackers stole information from August through October until the breach was discovered.  As a result, 3.8 million tax records and 387,000 debit and credit card numbers were compromised.  South Carolina has already allocated $12 million and the final response expense is estimated at $20 million.

The scary thing is according to the Verizon 2011 Data Breach Investigations Report the largest percentage of breaches involved companies with 11 to 100 employees.  Furthermore, most states require you to notify your clients of any possible breach.  Just the notification and credit monitoring to all of your clients will cost an estimated $15 per record.  According to 2010 Symantec data, the average cost to small and mid-size businesses due to cyber attacks was almost $190,000 and that almost 60% of small businesses will be out of business within 6 months of a cyber attack.

Most businesses would look to their commercial general liability policy to cover the loss.  Unfortunately the general liability policy will have an exclusion that reads it “does not provide coverage for loss of electronic data as such data is not tangible property and thus not considered property damage”.  Sometimes you can somewhat get around this exclusion by endorsing your general liability policy to redefine tangible property.  Unfortunately, this will not cover your loss from a breach or loss of data.

The insurance industry’s response is called a cyber liability policy or data breach policy.  A good cyber liability policy will address the costs associated with data breach including notification expense, restoration of records, theft, and electronic media protection and your client’s costs.

Cyber liability insurance Alvin has policies that will soon compete with employment practices liability policies as the fastest growing area for business liability claims that were not covered by insurance.

There are a few factors you should be aware of:

First: There are only a few insurance companies that offer data breach insurance policies.  As a result, you should contact an independent agent that has access to many different insurance companies instead of a direct writer that has access to just one company.  There’s a high probability the direct writer would not even have a policy to offer.

Secondly: Any business that accepts credit cards as a form of payment or keeps client sensitive information are potential targets.  This means accountants, mercantile stores, doctors, lawyers, banks, schools, title companies are all prime targets.  By the way insurance agencies are targets and you can bet we have data breach insurance.

Thirdly: The most common causes of data breach are as follows:

Lost laptop
Outsourced technical support
Stolen electronic back up
Stolen paper records
Malicious insider
Hacker

There are a number of ways you can lose your client’s info.  Be careful; be smart.

In conclusion, if you keep any sensitive information on your clients, we strongly recommend you at least acquire a quote for cyber liability.  The data breach application is very short and simple.  If you need any assistance, contact us at your convenience.