An employee of a dentist office accidentally clicked on a link that contained malware. The virus was then downloaded onto the company server causing all data to be encrypted. Following this, the employee received an email demanding $30,000 paid in Bitcoin within 24 hours to release their data and files back. Over 950 customer records including name, address, dental record numbers and diagnoses were encrypted. Luckily this business had cyber insurance to help with with the incident response, notification costs, business interruption, data recovery, ransom payment and more. Overall the damage costs rose to $73,899!
Cyber Insurance coverage can ease the pain of a cyber-attack and protect your company from further reputational and financial damage. There is a wide range of coverage that is available within a cyber insurance policy such as first-party coverage, third-party coverage, and cyber crime.
What is First-Party Cyber Coverage?
First-party cyber coverage is a type of insurance coverage that provides financial protection to a business in the event of a cyber loss. It is called “first-party” coverage because it covers losses sustained by the policyholder (the “first party”) as a result of a cyber event, rather than the losses sustained by a third party.
First party cyber coverage can provide financial protection for a wide range of losses related to cyber events, including:
- Business interruption: Loss of income or increased expenses resulting from a disruption to the policyholder’s business operations caused by a cyber event.
- Data recovery and restoration: The cost of recovering and restoring data that has been lost or damaged as a result of a cyber event.
- Cyber extortion: The cost of responding to a cyber extortion threat, including the payment of a ransom demand.
- Notification and credit monitoring: The cost of providing notification and credit monitoring services to individuals whose personal information has been compromised in a data breach.
- Forensics and investigation: The cost of investigating and determining the cause of a cyber event, including the engagement of computer forensics experts.
First-party cyber coverage is an important component of a comprehensive cyber risk management program, as it can help to protect a business from the financial impact of a cyber event.
What is Third-Party Cyber Coverage?
Hackers breached a residential construction company's network from a vulnerability in an outdated software. 850 names, addresses, phone and credit card information were compromised. There were many costs assocaited with this incident but one of the highest costs in this claim was the legal fees that added up to well over $200,000. The legal expenses increased from the regulatory investigation due to mismanagement of private information.
Third-party cyber coverage is a type of insurance coverage that provides financial protection to a business in the event that it is sued by a third-party for a cyber-related loss.
Examples of third-party claims that might trigger third party cyber coverage include:
- Data breach: A customer or client sues a business for failing to properly secure their personal or financial information.
- Network security liability: A business is sued by a third party for the unauthorized access to or theft of their confidential information as a result of a network security breach.
- Privacy liability: A business is sued for violating an individual’s rights to privacy by collecting, storing, or using their personal information without their consent.
- Media liability: A business is sued for spreading false or defamatory information through its website, social media accounts, or other digital channels.
Third-party cyber coverage typically provides coverage for defense cost and any settlements or judgements that may arise from a third-party cyber-related lawsuit. It is important for businesses to carefully consider the specific risks they face and determine if third party cyber coverage is necessary.
What is Cyber Crime?
Cyber crime coverage covers damage due to any type of illegal activity that occurs using digital means.
- Computer Fraud: Covers funds or property stolen resulting from a hack.
- Funds Transfer Fraud: When a criminal deceives a bank/institution to transfer funds.
- Social Engineering: When cyber criminals deceive a business to willingly transfer funds.
Cyber Crime claims are the most common at this time. It is important for businesses to understand if they have coverage for these types of attacks or not.
Benefits of Business Cyber Coverage
Cyber coverage is well worth the investment to your business. Every business is at risk of a cyber attack. Cyber insurance gives you peace of mind, guards you against unexpected costs due to an attack, and gets your business back to where it was prior to the attack.
Troxell works with a variety of A rated and above cyber insurance companies to protect your company in the event of a cyber attack. Our team understands the risks that are associated with cyber crimes and will give you the best option for your business. We see companies experience small to large cyber attacks daily and will advocate for your business if you are a victim to this type of crime.
Don’t wait to take action and contact TROXELL today! Small Businesses receive the highest rate of targeted, malicious emails in the US. One click on a bad email can cost up to hundreds of thousands of dollars. Purchasing cyber insurance is just a fraction of the cost that a small business is at risk to. Global cyber attack cost projections are estimated to double in cost over the next three years and it is already a multi-trillion dollar industry!
Understanding your cyber insurance is a critical step, but it’s just one piece of the puzzle. Reach out to your team at TROXELL and discuss your potential Cyber Exposures!
This blog post was written by:
Ryan Augustine