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6 reasons your company could use cyber liability insurance

(Photo: Shutterstock)

First, the good news: the fragmented and antiquated trucking industry has caught up with the times. 2018 has been a year of accelerating and adopting technology at top speed. Connected devices, including IoT and telematics platforms, abound. The bad news? As a result, we’re more at risk than ever. If you don’t think cybersecurity is a major issue, consider this list of startups that raised venture capital from Q2 of 2018.

Through the advancement of technology everything’s connected, or well on its way.  Meanwhile, for hackers the current situation is ripe for data rip-offs. There are multiple entry points from phishing, to spam, to user passwords, to installing malware, to divulging confidential information to third party vendors, and so on.

It’s not just hackers and security that can lead to a “cyber” problem, either. Exposures are vast. Just having an internet presence and shared databases creates exposure. Traditional business liability policies are unlikely to protect against most cyber exposures. Most commercial policies are written to insure against injury or physical loss and will do little, if anything, to shield a company from electronic damages and associated costs.

Awareness is essential to managing risk. The partners at Reliance have put together the following reasons to increase awareness and consider coverage.

1. Data breaches

Increased government regulations have placed more responsibility on companies to protect clients’ personal information. In the event of a breach, notification of the affected parties is now required by law. This will add to costs that will also include security fixes, identity theft protection for the affected, and protection from possible legal action. While companies operating online are at a heightened risk, even companies that don’t transmit personal data over the internet, but still store it in electronic form, could be susceptible to breaches through data lost to unauthorized employee access or hardware theft.

2. Intellectual property rights 

Your company’s online presence, whether it be through a corporate website, blogs, or social media, opens you up to some of the same exposures faced by publishers. This can include libel, copyright, or trademark infringement and defamation.

3. Damages to a third-party system 

If an email sent from your server has a virus that crashes the system of a customer, or the software your company distributes fails, resulting in a loss for a third party, you could be held liable.

4. System failure 

A natural disaster, malicious activity, or fire could all cause physical damages that could result in data or code loss. While the physical damages to your system hardware would be covered under your existing business liability policy, data or code loss due to the incident would not be.

5. Cyber extortion 

Hackers can hijack websites, networks, and stored data, denying access to you or your customers. They often demand money to restore your systems to working order. This can cause a temporary loss of revenue plus generate costs associated with paying the hacker’s demands or rebuilding if damage is done.

Randy Goggans, co-founder and executive VP of ThreatAdvice, says there’s a well-known saying in his circles: There are only two types of companies. Those that who been hacked, and those who will be. “Really, to me, it’s ‘and those who have been hacked, and those who don’t know they’ve been hacked.'”

“This is organized crime,” Goggans say. “It’s sophisticated, and they’re after you. So, get prepared. It takes an average of 206 days to detect a breach. Most companies we see today pay the ransom. It may not be a lot. It may be like three bitcoins, but when it comes down to it, CEOs want their data back. They usually pay.”

“$3 billion [in] ransomware was paid out in cryptocurrency in the U.S., and over $500 billion globally in 2017 alone,” he says.

6. Business interruption 

If your primary business operations require the use of computer systems, a disaster that cripples your ability to transmit data could cause you, or a third party that depends on your services, to lose potential revenue. From a server failure to a data breach, such an incident can affect your day-to-day operations. Time and resources that normally would have gone elsewhere will need to be directed towards the problem, which could result in further losses. This is especially important as denial of service attacks by hackers have been on the rise. Such attacks block access to certain websites by either rerouting traffic to a different site or overloading an organization’s server.

Cyber liability insurance is specifically designed to address the risks that come with using modern technology. The level of coverage your business needs is based on your individual operations and can vary depending on exposure. It is important to work with a broker that can identify areas of risk so a policy can be tailored to fit your unique situation. Doing all the right things and prevention maintenance isn’t always the answer. Sometimes you need a little security on top, and that’s where cyber liability insurance just might be the answer.