By Chris Richmond
Originally Submitted to WorkBoat Magazine
A recent policy review with a client found an interesting update. The client, who distributes seafood, had reduced gross revenues. This was not surprising , given the downturn in the economy. What was surprising was a sharp increase in retail sales. Further discussion revealed that they had a growing online store with direct sales to consumers. They were in need of a cyber policy.
Whether or not you sell goods online, you really should consider a cyber policy. On daily basis, headlines in publications for every industry outline hacks, phishing schemes and other cyber crimes.
There are two important types of cyber liability to know about: First party and third party.
A first party cyber liability occurs when your own data is stolen. This can include your own employees’ personal information or information about your customers. A cyber liability policy will provide credit monitoring services to assist the affected individuals which could help minimize the risk of identity theft. Included in the category of first party cyber liability are:
• Funds Transfer Fraud. Funds Transfer Fraud is an intentional, unauthorized instruction transmitted via email to a financial institution to transfer funds. If your computer system is compromised, a hacker can have access to your banking information and initiate fraudulent electronic wire transfers.
• Lost Business Income. Lost business income due to cyber theft, (a hack or data breach), is not covered unless cyber coverage is in place. Your regular business insurance policy covers you for things like fire, theft and wind, but not anything cyber-related.
Third party liability coverage can provide protection for damage caused by your business to third parties due to a hack. This could be confidential client information that you store in your system. Coverage included in this category are:
• Breach of Privacy: A client’s personally identifiable information has been accessed by an unauthorized party.
• Misuse of Personal Data: Personal data is stolen or misused and they suffer financial damages.
• Transmission of Malicious Content: Failure to stop the transmission of virus, malware or other malicious content.
Many liability policies come with limited cyber coverage but also they leave gaps in coverage. A stand alone cyber policy can cover these gaps and provide the insurance that a business needs today.