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Cyber Insurance in 2015

New technology- new threat

Cyber insurance is quickly becoming a must-have policy for many corporations, large and small.  High-profile security breaches, combined with falling premiums and recent exclusions to the commercial general liability policy, are causing this emerging coverage line to gradually become a staple in any solid business risk management and insurance program.

At least 35 carriers are writing stand-alone cyber policies, with many more providing it by endorsement. Coverages vary greatly, and there is no standard cyber form at this time. With many coverage exclusions to consider, having a trusted commercial insurance agent to guide business owners through the terms and conditions of any cyber policy is key.

While financial transactions may be a coveted avenue of attack, what hackers really want is personal confidential information (PCI). This consists of personally identifiable information such as names, addresses, birth dates, and credit card numbers, as well as personal health information like medical records.


"Having a trusted agent to guide business owners trough the terms and conditions of any cyber policy is key."
- Jason Quinn


A 2014 study by the Ponemon institute focused on 61 US companies over 16 business sectors in the US.  Of these companies suffering a data breach, the cost per record is just over $200, with the average cost to that organization at $5.9 million.

Most small businesses can’t afford a loss of this size.  A broad cyber insurance policy, coupled with a solid cyber security plan, can significantly reduce the potential for this type of financial meltdown.

The following are several coverages you should expect from your cyber policy:

  • Privacy and security liability for settling with clients for their incurred losses, as well as the costs of notifying those clients of the breach
  • Regulatory fines and penalties coverage
  • Public relations and crisis management coverage, to mitigate the damages
  • Loss of data, intellectual property, and direct damage to network coverage, as replacing hardware and recovering files and other data can be costly
  • Cyber extortion coverage for threats to a site or system
  • Business interruption coverage, if there is a potential for loss of income

A few years ago, small business owners faced minimum premiums of several thousand dollars.  Today, cyber policies start at a minimum premium of $1,250 plus taxes and fees.

No business—no matter its size—is immune to the threat of a cyber incident.  Procuring the right cyber insurance policy for your company, and solidifying your cyber security plan, will prove to be a worthwhile investment.

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