By Scott Cooper and Stan Hartman.
Imagine this: You try to update your business’s software and hardware regularly, stay on the latest technology and security trends, and educate employees on best practices. Despite your efforts, you get hit with a ransomware attack that leaks sensitive customer information, shuts your business down for days, and forces you to lose revenue during the busiest time of the year.
What would be great to have in this moment? A cyber insurance policy that includes business interruption insurance.
Why is cyber-insurance a necessity?
General liability policies are not designed to provide the liability caused by a cyber incident.
Therefore, if a hacker breaches your firewall, steals clients’ social security numbers and sells them on the dark web, you’re liable to pay all the costs associated with notifying customers of the hack. You’ll also have to provide them credit monitoring services, and pay for losses they incur on top of government fines.
Sometimes these damages are so large, they can actually bankrupt a business!
When searching for a cyber insurance policy, make sure it has strong coverage for both first party and third party liability. First party coverage revolves around direct costs incurred to you as a result of the breach, like the cost of notifying your customers and paying public relations professionals to offset loss of reputation. Third party coverage is more about defense costs and expenses. This could include issues related to lawsuits arising out of a failure to properly secure your client’s privacy as well as claims alleging infringement of intellectual property rights.
Why is business interruption insurance a good idea?
Business interruption insurance was originally popularized with disaster relief. For example, if a hurricane or tornado came and interrupted your business, this type of insurance would really come in handy as it would recover losses incurred by the disaster. Today the more common type of disaster may actually be an IT-related incident.
For example, if the same hacker who stole your customers’ personal information also triggers a complete site shutdown and takes your business offline for many hours, you would need a cyber insurance policy that includes business interruption insurance in order to get help with lost revenue and extra expenses.
Depending on the plan, it could also cover your lost income if a third party provider, such as Microsoft Azure or Amazon Web Services, goes down and brings your business with it.
According to Alliant, business interruption insurance, which may also be called business income insurance, normally covers:
- Loss of income
- Operating expenses and other costs that continue after the shutdown
- Extra expenses that allow a business to continue during restoration
The easiest way to ensure that you’re covered for business interruption and cyber issues is to buy a cyber policy that includes business interruption insurance.
If you would like to set up a time to see if cyber insurance including business interruption insurance is right for your business, please email Stan Hartman, 1st Vice President at Alliant Insurance Services.
President of Tower 23 IT, Scott Cooper, is also available to answer your IT-related insurance questions.
Clip Art provided by basicavisual with a Creative Commons license.