Does my business need cyber insurance?

DOK Insurance Agency

What is cyber liability insurance?

Cyber Liability Insurance is designed to cover businesses that serve clients by engaging in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network. For the most part, Cyber Liability Insurance covers a business’ liability for a data breach in which the company’s customers’ personal information, such as bank account numbers, Social Security or credit card numbers, was exposed or stolen by a hacker. These policies usually cover a variety of expenses resulting from data breaches, including:

  • Notification costs
  • Costs to defend claims by state regulators
  • Cost of fines and penalties
  • Credit monitoring

In addition, the policies often cover liability arising from content place on the business’ website, as well as property exposures from:

  • Business interruption
  • Cyber extortion.
  • Data loss/destruction
  • Computer fraud
  • Funds transfer loss (Phishing)*

*It is important to read each policy carefully as some coverages, such as phishing, aren’t always included automatically. For example, if your company wrongfully transfers funds to another business or individual due to a phishing attack, your Cyber Liability Policy may not cover it.

Some common misconceptions:

My sensitive information is stored on a third party web-server and/or cloud. It is their (legal) responsibility to keep the data safe:

You may want to read your contract more carefully if you assume that all responsibility to keep your client’s data safe falls on another tech company you pay to store sensitive data. That responsibility falls ultimately on the company that collected the information to begin with. Especially if your company caused the security lapse, there is little to no chance that the web or cloud hosting company will step in to bear some of the costs.

We have the best security software and system in place and any breach is the other company’s responsibility.

Just as with web-hosts and cloud servers, the party primarily responsible to keep confidential data secure is the company that obtained the information from the client.

Cyber Liability Insurance is a waste of money.

Costs to investigate a breach and comply with statutory notification requirements – in 2015, the average cost was $217 per lost or stolen record.* Fact is, that the frequency of attacks and the cost to defend them have gone up substantially in recent years with no end in sight.

Claim scenarios:

Unauthorized access at a non-profit organization

An international computer hacking group gained access electronically to the computerized database of a foundation and stole credit card information of 5,000 donors, starting a flood of fraudulent purchases around the world.

Human error

An employee of a private high school mistakenly distributed via e-mail the names, social security numbers, birthdates, and medical information of students and faculty creating a privacy breach. Overall, 1,250 individuals’ personal information was compromised.

As criminals are getting smarter about their techniques, your business needs to make sure to not only have safety and security measures in place, but also the right cyber liability coverage.

Please do not hesitate to call us at 425-242-5252 to find out how you can better protect your business.

T: (425) 242-5252
O: 425-242-5252
E: dom@dokagency.com
A: 1500 Benson Road South, Suite 201 Renton, WA 98055

Dominik Kunigk

Managing Broker & President

Dominik was a German exchange student in high school before graduating from the University of Washington in Business Administration – Information Systems and Retail Management. His insurance career started in 2008 when he decided leave his retail management career behind to start his own business. His American Family Insurance agency quickly grew to service 700 clients and families. While the idea of becoming an independent broker started in 2010, a horrific car accident put that plan on hold. In 2014, Dominik and his wife Michele changed from a captive agency to become the independent agency that you see today.

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