Cyber Liability Insurance

Why Does My Business Need Cyber Insurance?

Typically, General Liability Insurance Does Not Cover Cyber Attacks.

With the ever-increasing use of technology in business today, the need for Cyber Insurance exists for any business that uses a computer. With the rise of frequency in ransomware as well as social engineering / financial fraud / crime claims, this coverage is more important than ever for all businesses, especially small businesses.

Without cyber liability insurance you will be responsible for all costs related to business interruptions, lost revenue, fines and the expense of resulting litigation against your business.

With cyber liability insurance, you can take the attack in stride, dealing with the challenges and obstacles of a cyber attack while maintaining a similar financial position your business enjoys today.

Cyber crime does not discriminate. The potential negative impacts are as diverse as the threat types—and businesses of any revenue amount or customer base size can be affected.

A Few Facts About Cyber Attacks

During the pandemic cyber attacks increased by over 600% from the previous year.
On average, 47.6% of small businesses are hit by cyber attacks.
The average small business received 94% of its detected malware by email.
About 83% of small businesses haven’t put cash aside for dealing with a cyber attack.

What Does Cyber Insurance Cover?

A cyber liability insurance policy offers a number of coverages to protect from both first-party & third-party damages. Examples of available cyber coverages are below.

First-Party Coverage:

First-party coverage protects an organization from the costs they may face should their own assets be damaged and need repair.

Within a cyber policy, coverages may include:

IT Forensic Costs: The costs to determine what information was breached and the cause of the breach.
Notification Expenses: The costs to notify individuals, businesses, and regulators of the breach and possibly run a call center related to this notification.
Credit Protection Costs: The costs to provide credit monitoring services to any affected parties.
Crisis Management Costs: The costs for media relations, including a possible public relations firm. How your organization publicly responds to a breach is crucial in maintaining the public’s trust.
Crime and Social Engineering: The cost of stolen funds in which your organization may have been tricked into sending to a fraudulent account.

Third-Party Coverage:

Third-party coverage protects your organization from claims that could be made against you by another individual or business.

Personally Identifiable Information (PII): This can include, but isn’t limited to:
- Credit card numbers
- Social security numbers
- Bank account information
- Personal health information
- Sensitive corporate information

Third-party claims related to, but not limited to:
- Breach of contract
- Negligent protection of data
- Network security breaches
- Transmission of software viruses
- Denial of service attacks
- PCI fines, penalties, and assessments

Additional Coverages:

Multi-Media Coverage: This covers the cost of possible online advertising, intellectual property, copyright or trademark infringement, and libel or defamation claims.
Cyber Extortion: This covers the cost of a possible ransom demand in the event of a ransomware cyber attack.
Cyber Business Interruption: This coverage is available for companies that rely heavily on the internet or their network for revenue. This may also include dependent business interruption, which can provide coverage when a third party that your organization relies on goes down or system failure where an outage is not caused by a breach.
Hacker Damage or Digital Asset Damage: This covers the cost to rebuild your:
- Website
- Intranet
- Network
- Electronically-held data

What Are The Potential Costs?

Below is a breakdown of the average costs of a breach based on NetDiligence research.

Breach costs — are only costs associated with the event & reported by the insurer.

Average cost for small and medium enterprises (SME): $178K

Average cost for large enterprises: $5.6M

Crisis services costs — expenses associated with responding to the breach; including breach coach counsel, forensic investigation, customer notification, credit / ID monitoring, & public relations.

Average cost for SMEs: $112K

Average cost for large enterprises: $3.8M

Legal costs — regulatory & legal expenses including lawsuit defense, lawsuit settlement, regulatory action defense, & regulatory fines.

Average cost for SMEs: $181K

Average cost for large enterprises: $2.2M

Lost business costs — is income lost due to the suspension of service.

Average cost for SMEs: $343K

(Data was not available for large enterprises.)

Unfortunately, during the months and even years after a breach, costs can continue to grow as those affected take legal action and penalties are imposed.

Cyber Security Is More Important Than Ever Today!

For Questions & Help With Your Cyber Liability Insurance Needs

(833) 672-2467

info@orcaig.com

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