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The Internet has changed the way most of us do business and has increased liability exposures. If any of the items listed below apply to your business, you most likely have Cyber Liability exposures.

  • you communicate by email
  • you provide information or services through a website
  • you conduct e-commerce
  • you store and use customer information electronically

why be concerned?

data breach insuranceWhile there are many publicized hacking attacks against large companies reported in the news, smaller companies face increasing computer liability risks, too.  Almost every business uses technology in some way, and your business can be held liabile if certain types of information are compromised.  It doesn't have to be a hacking attack; it could be the loss or theft of a smartphone or laptop that could expose your business to liability. Privacy and data security risks are constantly change and increasingly regulated by laws such as the Massachusetts Personal Information Privacy law, MA 201 CMR 17. In addition, given the number of people and businesses browsing the Internet, the possible pool of plaintiffs is immense. A single legal action could inflict significant financial damage, and traditional liability products do not address Internet exposures and the risks involved in Internet business activities.

Cyber liability risks are evolving rapidly with new risk scenarios emerging all the time.  Insurance experts regard cyber risks to be greater than risks related to fraud or theft.  Given this situation, your business can take a variety of steps to protect itself and limit exposure such as:

  • Installing, maintaining and updating security software and hardware
  • Developing, following and publicly posting a data privacy policy
  • Regularly backing up data at a secure offsite location
  • Hiring an IT security services vendor
  • Using cloud computing services
  • Obtaining cyber liability insurance

what are your cyber liability risks?

If your computer systems are hacked, or customer, partner or employee information is lost, stolen or compromised by a security failure or data breach, the costs of response and remediation can be significant. Here are some of the costs your business could incur:

  • Liability—Your business may be liable for costs incurred by customers and others that arise from a IT-related breach or cyber attack.
  • Notification expenses— Many states require your business to notify customers stored if a breach of personal private data occurs or is suspected.  The cost can be high especially if you have a many customers.
  • System recovery—The costs to repair/replace computer systems and lost data can be significant.  If a breach results in your company being unable to operate while your systems are down, you could incur additional losses.
  • Lawsuits—Class action lawsuits filed on behalf of customers whose data and privacy were compromised. The larger the breach; the larger the liability and associated costs.
  • Regulatory fines—Several federal and state regulations require businesses and organizations to protect consumer data. If a data breach results from your business’s failure to meet compliance requirements, you may incur substantial fines.
  • Reputation damage— Your business' reputation and customer trust may be significantly damaged.

what is Cyber Liability insurance?

Cyber Liability protection addresses the first- and third-party risks associated with e-business, the Internet, networks and informational assets. The category of Cyber Liability includes security breaches; data theft; virus transmission; privacy issues; copyright, trademark and intellectual property infringement; libel or any other issues that first parties can pass to third parties via the Internet. Some of the types of claims that may occur include:

  • Accidental release of confidential customer information
  • Spreading a virus into a customer’s computer system
  • Theft of customer’s credit card or banking account numbers
  • Identity theft resulting from data breach
  • Derogatory comments made online about a competitor by an employee
  • Denial of service attack hacking
  • Electronic data extortion or destruction
  • Interruption of business operation due to system being down
  • Webmaster uses another site's content in site development

While the exposures outlined above are not all inclusive, and no policy covers every risk, Cyber Liability insurance is of growing importance if any of the above situations applies to your business. Contact us for more information about obtaining cyber liability coverage for your business.

Additional Resources

NetDiligence 2019 Cyber Claims Study (download pdf)

Top 5 Cyber Risks for Businesses

MA 201 CMR 17 Compliance

MA 201 CMR 17 FAQs (download pdf)

 

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The information provided in these articles are only general descriptions and should not be relied upon as complete, correct or accurate for your specific situation. All coverage informaiton is subject to policy provisions, endorsements and may be  subject to your meeting underwriting qualifications. Murphy Insurance Agency is not engaged in rendering legal, accounting or other noninsurance professional services. Consult an appropriate professional for advice regarding your own situation.