Cyber Coverage, 2.0!!

April 3, 2013 – Orange County, California

Several months ago, we published a blog about Cyber Liability Insurance. Now, we did get some inquires and a few clients exploring the possibility of acquiring this type of insurance, however, with the headlines full of famous politicians and celebrities recently being hacked, and because it seems to be getting much worse, we felt the need to revisit this topic and, hopefully, once we do, more businesses will take a good, long, hard look at this coverage for their business. As we have stated before, liability for loss of your customers or employees data is not usually covered under your business General Liability insurance policy. What we find most of the time is that most company owners or presidents discover just what significant gaps they have in their insurance policies, and, in particular, what isn’t covered after a cyber attack has happened. Recently, I was reading an industry newsletter which stated that somewhere over sixty percent of U.S. companies didn’t have any cyber liability insurance; yet, when asked if they were concerned about a cyber breach, the overwhelming response was yes! The only analogy that would come close to this thinking is that if you owned a convenience store and you decided that door locks were an unnecessary expense. It really is hard to understand why more companies do not have this type of coverage regardless of the size of the company.

Also, you have to realize a cyber breach can run into the millions of dollars, and more times than not, it does. To determine what the price for your policy would be will be mostly based on what type of company you have. If your company is one that transacts most of its business via its website, your premium will more likely be higher due to the risk of storing data which includes your customers’ credit card information and are more likely to be hacked. If your business deals with medical related data, such as your patients’ health reports, their social security numbers among the information, cyber coverage is almost a must. To receive the best price and terms on such a policy, I suggest you consult with a professional insurance broker at PJO Brokerage who can guide you through the process, which includes devising a program to protect your website from hackers as much as possible. Start with reviewing how your password system works and determine if it is secure enough. Initiate a program of risk assessments to your website to see if there could be vulnerability and what can be done or upgraded to fix the situation. Having a written policy in place for such an attack and what your course of action will be shows the insurance company that you take cyber breaches very seriously. Look at having an IT consultant come in and assess whether your firewalls, virtual private networks, anti-virus and anti-spam software, and secure mobile applications are as secure as humanly possible and what else can be done to upgrade your system. Think, just for a moment, how far technology has come since the entire world was abuzz about the impending Y2K scare we had when the year 2000 arrived. Let’s be honest, in today’s world, it wouldn’t even merit a mention compared to what is happening with what hackers are doing these days. As you can see, technology has changed the world in so many ways over the past ten+ years; one has to wonder what is in store for us the next ten years, or, for that matter, even the next three to five years. Today, there are many options and more companies writing Cyber Liability insurance policies than they were even five years ago, so we urge that if you are feeling a little uncertain on how a breach on your website would affect your business, please call PJO Insurance Brokerage and let one of our insurance professionals design a plan for your company.