Almost every business in the United States is vulnerable to an attack to their computer systems and the confidential information that they maintain. Cyber attack prevention is critical to running your business. Unfortunately, due to the seeming endless and limitless cyber attacks, there may be times when you are impacted by an attack and need insurance to respond.
Your general liability policy specifically excludes property damage to electronic data. Insurance companies are starting to offer coverage through endorsements and stand alone policies. Because this is new territory for insurance companies, the pricing and coverage being offered vary greatly.
Coverage available at this time is broken up into 3 tiers of coverage that you should consider:
Tier 1: Loss of Your Electronic Data | Covers cost to replace electronic data or computer programs, public relations expense & security breach expense. It also covers the cost to determine if a security breach has occurred, the costs to determine how to respond to the breach, costs to notify affected parties of the breach, overtime salaries to employees, call center costs to handle inquires on the breach, and post event monitoring. Please note that expenses such as upgrading your computer system are not covered.
Tier 2: Liability Coverage | Security breach liability are claims by third parties arising for wrongful acts with respect to your failure to maintain security of personal data. Coverage includes the cost of fines (depending on state law) and defense expenses. A security breach is defined as any actual/alleged neglect, breach of duty or omission by you that results in a security breach or computer system transmission of a virus to a third party. The main target is personal information that you maintain that includes information such as social security, driver’s license, or State Identification numbers, protected health information, financial account numbers, security codes and passwords, and any other nonpublic information as defined in “Privacy Regulations”. Coverage is provided for computers, including Personal Digital Assistants/Hand-Held Devices. The breach to Target was through an HVAC contractor that was infected and was used to access personal information through online invoicing.
Tier 3: First Party Expense Coverage | This covers the fees and costs to your business to determine the validity and severity of an extortion threat, interests costs for a loan taken out to pay ransom demands, reward money for conviction of perpetrators and reasonable expenses inccurred by your business due to breach with insurance companies written approval. Business interruption can be covered and is available with limitations, as suspension of operations due to corruption of data is not included. Website publishing liability covers damage to a third party due to the content that you post on your website.
Please note that the information above highlights some of the coverage that should be considered. Each business has their own unique exposure to cyber liability and needs to be addressed individually with your agent. Most businesses that suffer a cyber liability attack do not survive the aftermath of the attack and go out of business.
Please feel free to call Pinnacle Group Insurance at 412-816-1000 if you have questions or feel we can be of service.