Privacy & Cyber Insurance for Florida’s Businesses
Computers, smartphones, and the Internet are things that help make businesses flourish and grow. But, Florida businesses, like all businesses around the globe, should prepare for a data breach. Cybercrimes are on the rise – ransomware that locks personal and corporate computers is the latest threat, but, theft of client and employee personal identifying information and personal financial information loom large as threats too and have greater returns for cyber criminals.
What is Privacy & Cyber Insurance?
Cyber and privacy insurance gives insured firms coverage for liability and property losses stemming from a data breach where a customer’s personal and financial information has been stolen. Policies like these provide coverage for breach associated costs such as:
Credit monitoring costs
Costs to defend claims by regulatory authorities
Fines and Civil Penalties
Losses caused by identity theft
Cyber insurance policies also offer coverage for liabilities originating from web content and other losses such as:
Business interruption from computer failure
Data destruction or loss
Funds transfer loss
A study conducted by IBM Security and the Poneman Institute dated June 2017, the costs associated with each record that is a breach victim is $255 per record. If your small company has 500 customer records you have exposure for over $127 thousand – a large sum for any small or medium-sized business that could result in a bankruptcy.
In addition, regulatory authorities such as HIPAA and the Federal Trade Commission have fined many companies for failure to protect data from breaches. These fines can run into multi-million-dollar territory with lots of legal costs. Privacy and data breach insurance help mitigate these fines and legal costs.
What is a Data Breach?
The definition of a data breach is an incident that puts an individual’s name and financial record, credit or debit card number, or medical record at potential risk.
What are the Causes of a Data Breach?
Business’ vulnerability to a data breach is one of the following events:
A criminal or malicious attack
Computer system glitch
Whatever the cause of a data breach, the costs of dealing with the breach can be astronomical. For instance, a major financial institution issues credit cards. They have 1 million users. If their data is breached and the entire data base is compromised, they will have costs that exceed $250 million ($255 x 1 million). These costs don’t include the loss of business from people switching credit card issuers or canceling their card.
Small and medium-sized businesses might never have 1 million customer accounts, but, a non-insured data breach still will cause great pain. Imagine a business has a client list of 1 thousand people that includes credit card information. Without insurance that business is looking at over ¼ million dollars in expenses to rectify the breach – few small companies can handle that magnitude of tapping resources.
Data Breaches by The Numbers
Just over half (52%) of data breaches in the United States is the action of criminals
24% of US data breaches come from system glitches
24% of data breaches in the US are due to human error
Data breaches related to criminal or malicious activity cost $244 per compromised record in the United States
In the US, the cost of recovery for data breaches due to system glitches is $209
Human error caused data breaches to have a recovery cost of $200
In the US, notification costs are higher than in any other country or region
Also, the US has the highest costs for post response at $1.56 million.
Lost business traced to a data breach is also highest in the United States at $4.13 million on average
One Out of Three United States Companies Now Has Privacy and Data Breach Insurance
It is evident that the costs of a data breach are high and that is why savvy business executives purchase Privacy and Computer Breach insurance. Bob Parisi, a managing director for Marsh LLC commented about this kind of insurance:
“Cyber risk and cyber insurance have really got the attention of the board room these days. It’s become less a discretionary purchase.”
It is becoming increasingly rare for a data breach to covered by commercial general liability insurance in the United States making investing in a cyber security insurance policy necessary for most businesses so that they are covered for liability for damages resulting from a data breach.
Typically, these policies cover many computer and privacy related issues such as:
Loss, theft, or unauthorized disclosure of personally identifiable information (PII) in the insured’s care, custody, and control
Damage to data stored in the insured’s computer systems belonging to a third party
Transmission of malicious code or denial of service to a third party’s computer system
Failure to timely disclose a data breach
Failure to administer an identity theft program required by governmental regulation or to take necessary actions to prevent identity theft. In addition, this insuring agreement covers the cost of defending claims associated with each of these circumstances.
Florida businesses recognize Dimmit Insurance as a leader in Florida’s commercial insurance markets. They are an independent insurance agency with access to the best carriers for all your insurance needs. Dimmit Insurance’s friendly and expert insurance advisors are waiting for your call toll-free at 866-763-6627.