In recent years, there have been an increasing number of costly computer hacking attacks against large companies, such as Target and Home Depot. But smaller companies face computer liability risks as well. Virtually all businesses use information technology (IT) in some way—to communicate via email, to provide information or services through a website, to store and use customer data and more. Your business can be held liable if certain data is compromised, not only by hacking attacks but even if a smartphone is lost or a laptop computer is stolen.
The risks of cyber liability are evolving rapidly, with new risks emerging as technology advances and new regulations are put in place. Insurance experts now consider the risk of cyber liability losses to exceed the risk of fraud or theft. In this tumultuous environment, your business can take several steps to limit risks, including purchasing cyber liability insurance.
If your computer systems are hacked or customer, employee or partner data is otherwise lost, stolen or compromised, the costs of response and remediation can be significant. Your business may be exposed to the following costs:
Some standard business insurance policies, such as a Business Owners Policy (BOP), may provide coverage for certain types of cyber incidents. For instance, if you lose electronic data as a result of a computer virus or hardware failure, your insurance may pay recovery or replacement costs. To extend coverage for a fuller range of cyber liability risks, you will need to purchase a stand-alone cyber liability policy, customized for your business. This type of policy can cover several types of risk, including:
Because computing technology changes rapidly, there is no absolutely sure-fire way to protect digital data and computer systems. In addition, technologies deemed to be highly secure can later develop vulnerabilities or be found to be vulnerable all along. For instance, websites worldwide used an encryption technology called OpenSSL for many years before the technology was discovered to be vulnerable to cyber attack. You may be able to limit your cyber liability risk by: