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 Why You Need E&O Insurance to Cover Cyber Liability

Why You Need E&O Insurance to Cover Cyber Liability

Businesses are becoming increasingly more web-savvy, with e-commerce, social media, email marketing and cloud storage. These tactics present incredible opportunities for boosting business. However, with new technology comes new risks. Just look at some of the numbers:

  • In 2008, common cyber risks included viruses, inside abuse and laptop theft. Nearly 50% of all businesses reported 1 to 5 cyber risks.
  • Fraud is the most expensive cyber risk, costing an average of $500,000 per incident.
  • The number of education records affected by data breach jumped 10% from 2011 to 2012.
  • In 2012, 36% of all businesses experienced a data breach.

No matter how many firewalls or other precautions you’ve installed, every business is susceptible to cyber attacks—some more than others. Businesses with low amounts of computer activity may find peace of mind simply with their general liability insurance policy. Businesses that rely on the internet and online databases won’t likely find enough coverage in the event of a data breach and should consider cyber liability insurance. Some of these industries include online retail, healthcare, education, financial institutions, technology and law firms. Apart from risking the loss of a business’ own information, businesses are also responsible for protecting sensitive customer information.

Cyber attacks are not limited to hacking; they also include hardware issues, communication media errors, operating system errors and even fraud committed by internal staff. The three types of cyber risks are:

  1. Natural: Weather disasters, such as lightning or power surges, can damage or destroy equipment containing sensitive information.
  2. Human error: Accidental acts, such as leaving a work laptop at an airport, could have dire consequences if information is leaked before it can be recovered.
  3. Intentional: Illegal criminal activity can be committed by outside hackers or internal persons.

Any type of cyber attack can be extremely costly to a business. After an attack, businesses have to retrieve lost or stolen information, establish safer online practices and perform cleanup efforts for customers. Cyber liability insurance provides compensation for business interruption, customer notifications, data loss and even hiring a PR firm to manage your brand image.

Secure your business’ online presence today. Call Insurance By Design at (972) 499-3414 for more information on Errors & Omissions insurance.

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