woman in black hoodie and guy fawkes mask holding credit card in front of computer screens

Protect Business From Hackers With Cyber Liability Insurance

Written by: Molly Reynolds (Commercial Lines Protection Specialist)

We conduct so much business online in today’s world. Many things have become so integrated in our daily lives we hardly even stop to think about how much of our information is accessible by the “bad guys” out there. Whether it’s by utilizing credit card machines, or rewards cards that hold our personal information, a hacker can strike at any time.

In order to protect your information and the information of your customers, having cyber liability insurance coverage in place helps to recover for any data exposures to outside third parties. 1 in 40 small businesses are at risk for cyber attacks. 75% of those businesses do not have cyber coverage, and 83% of those businesses do not have a budget to recover from a cyber attack. Unfortunately, 60% of small businesses go out of business within 6 months of a cyber attack.

What is a Cyber Attack?

A cyber attack, or sometimes known as a data breach, is considered to be loss, theft, accidental release or accidental publication of a customer’s or employee’s personally identifiable information.

Examples include:

  • Social security numbers
  • Bank account numbers
  • Driver’s license numbers
  • Credit and debit card numbers

Benefits of Cyber Liability Insurance

Cyber Liability coverage pays for 1st and 3rd party claims. 1st party pays for expenses you may incur such as notifications, legal and forensic inspections, crisis management and public relations. 3rd party is coverage for losses arising from civil awards, settlements and judgements that you are legally obligated to pay if someone sued you for their information being leaked because of your data breach.

Data Breaches Can Hurt Businesses

A client of ours almost had a data breach a few years ago. The business is a restaurant, which of course takes many credit cards from its patrons daily. A hacker set up equipment in his vehicle in the parking lot and attempted to break into our client’s point of sale system via the Wi-Fi on their registers in order to gain access to the credit card information. Thankfully, the hacker was ultimately found before he could get any sensitive information, but it was a wake up call to the restaurant owner that her customers’ information could have easily been stolen. Security measures were put in place to make sure that her computer system was encrypted to prevent this from happening again. But she also increased her cyber liability limits to protect her business in the event the same situation was to happen in the future.

Another example is a client who owns a specialty store where you can create and bottle your own wine. Someone hacked his point of sale machine in an entirely different state. His customers’ credit card information was stolen and used to make fraudulent purchases. He was responsible for contacting all of his customers on his own to notify them of the breach. Imagine receiving that call from a place you visited 6-12 months prior. That’s a scary phone call to receive! Not to mention, for the business owner, he had to spend many hours tracking down customers either by phone call or email to be sure they were notified. Unfortunately, he did not have Cyber Liability coverage in place for his business. He wound up spending $20,000 out of his own pocket to have a forensic accountant track down the money that was stolen from him and what they stole from his customers. Needless to say, he purchased cyber liability coverage with $5,000,000 limits to be sure he would never find himself in this situation again.

Credit cards are not the only sensitive information that has the potential to be stolen. Medical records and personal records are accessible as well. Many doctors’ offices and hospitals keep their patient records online in a portal or in the “cloud” in today’s world, rather than in paper files in filing cabinets in their offices.  Accountants offices and law firms also keep many personal records online.

How to Avoid a Cyber Breach

It’s important to know what to look for to ensure you are not the victim of a cyber breach. Have you ever received an email from a company such as PayPal or iTunes telling you your account has been compromised and to “click the link below” to change your password? These emails are called Phishing Emails. They are disguised as legitimate emails from reputable companies, and the average consumer will easily click on that link thinking their password needs to be changed. The link then goes to a website disguised as a PayPal website or an Apple website referencing iTunes. Without thinking about it, the consumer changes their password, thinking their account is in jeopardy. But it turns out that the email came from a hacker who just gained access to a password that you may use for several other of your own personal accounts. BOOM! Now they have access to your online presence elsewhere: social media, email, banking information, etc.

Other ways scammers like to infiltrate your information is by sending you an email disguised as a client or coworker, with a fake pdf attachment telling you to open the attachment. If opened, this can then install spyware into your computer system which can mirror your screen with theirs and then they can access any of your company’s information through your own servers.  Some hackers will even go as far as holding your information for ransom and demanding a payment in order to regain control of your computer servers and client information.

Cyber Liability Insurance Can Protect You

Staying diligent in protecting yourself, your business and your customers’ personal information is essential in today’s world. As technology changes and improves, hackers are changing and improving with it. Cyber liability insurance is necessary for any industry in the 21st century. Contact Schumacher Insurance Agency to protect your business from hackers moving forward!