Is Cyber Insurance More Needed Than Ever?

During the 2013 holiday shopping season, big box retailer Target was the victim of a massive cyberattack. Financial information from approximately 40 million credit cards was stolen as well as roughly 70 million customers’ contact information.

In late 2014, Home Depot announced its security had also been breached. The cyberattack, which the company announced started in April 2014 and had gone unnoticed for months, led to 56 million credit and debit cards being stolen by the perpetrators. Home Depot later reported the security breach cost the company approximately $62 million.

Businesses affected by such attacks may not have the financial resources available to properly move past a large attack. And, these attacks have not been limited to retailers. Financial institutions and even government agencies constantly have to worry about them.

If you’ve ever been the victim of an online attack, either  from your information being stolen in a massive breach or your home network’s security being bypassed, you understand just how scary the situation can be.

Online attacks are not going away anytime soon; however, banks and other financial institutions are offering cyber liability insurance to help protect businesses and individuals.

A businesswoman on a laptop.Whether at work or home, computer security is needed.

What is cyber insurance?

As its name implies, cyber liability insurance coverage (CLIC) provides you the dollars necessary to pay for the costs of loss, in the event your virtual security is ever breached and loss of data or Personal Private Information (PPI) occurs. While individuals are encouraged to inquire about coverage, businesses absolutely need to consider coverage for this type of loss.

If you’re a business owner, you should inquire about CLIC sooner rather than later. Why? Your business contains financial transactions with customer information. And, your business has valuable intellectual property, as well as employee information.

In both instances, coverage will vary depending on the type and size of your business, as well as the type of data you process and store. As a business owner, you’ll also have to make crucial decisions with regards to this coverage option. You may find you don’t have to pay as much as originally thought, but when shopping around for CLIC, you should look to see what additional services you’ll be paying for.

“Cyber insurance is still a relatively new field.”

For instance, because cyber insurance is still a relatively new field, not every agent or insurance company has the strong knowledge in place like they would about renters insurance. Therefore, it’s important for your business to find a provider who will also offer expert advice and additional services as part of the monthly or annual premium. Security breaches are scary and understandably so. Rather than make an avoidable mistake, you can lean upon support services.

Coverage for individuals
Cyber insurance coverage is more limited for individuals when compared to businesses. As of now, most insurance companies do not offer individuals plans specifically pertaining to personal security breaches. Instead, some providers offer identity theft coverage as an add-on to homeowners, renters and condominium insurance, available only if you pay an extra monthly fee. If you do so and find your identity has been stolen, insurance companies will reimburse you for some costs, such as identity fraud legal fees or any costs you might incur for getting credit reports.

While helpful, this optional coverage is limited in scope. There is no guaranteed protection if your money is stolen, but you’ll benefit by contacting your bank and local law enforcement in a timely manner and reporting the crime.

Potential changes in the near future

Cyber insurance is a growing movement. As it stands, businesses should absolutely find coverage immediately, while individuals may have to wait for companies to offer stand alone options. Either way, you should take the necessary precautions whenever you’re online to protect your checking account and savings account.

If you’re interested in learning more about cyber insurance, please talk to a Bank Midwest Insurance Agent today.

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