Cyber Security Insurance

Cyber attacks on businesses are on the rise. In fact, according to Symantec Corporation, cyber attacks were up 42% between 2011 and 2012. You may have heard of the high profile cyber attack on Target Corporation recently but what you may not know is that 31% of such attacks are against companies with less than 250 employees! A 2013 study by Ponemon Institute confirmed that data breach costs U.S. companies an average of $188 per stolen record.

Is your business protected?

Watch this short video to learn how data breach can impact your small business.

Why your company needs cyber security insurance:

  • Asset Protection: Security breaches can result in thousands, if not millions of dollars in losses
  • Reptuation Protection: Security breaches can also impact loss of reputation
  • Federal Laws: may require your business to take specific steps in the event of a security breach
  • Exposure: The more personal customer data you collect as a business the more your business is at risk

Cyber Security Insurance can protect from various costly threats including:

Identity Theft E-Vandalism E-Business Interruption Cyber Extortion Lawsuits
Theft of social security and/or credit card numbers, driver’s license, or financial information Malicious hacker attack leading to theft or damage of confidential information Loss of income due to e-Business interruption caused by digital attacks Loss of income due to e-Business interruption caused by digital attacks and/or credit card numbers, driver’s license, or financial information Stemming from unauthorized access of personally identifiable information; intellectual property, trademark or copyright infringement; invasion of privacy, libel, slander, defamation, or product disparagement

Cyber security insurance highlights include:

  • Privacy notification expenses covered
  • Crisis management and privacy notification expenses covered even if no cyber liability claim is filed
  • Coverage of legal counsel and security forensics investigators costs
  • Extra expense coverage has no retention and is triggered even if system impairment is potential

Why choose McLean Insurance For Your Cyber Security Needs?

  • Personalized Service – You will be treated as family at McLean Insurance Agency. Our advisors are local and easily accessible. They have a solid understanding of cyber security insurance needs for small and medium size businesses
  • Trusted Advice – All McLean Insurance advisors undergo significant training. They are skilled at assessing cyber security risk and offering solutions to cover your business in case the unthinkable happens
  • Save Money – We will shop multiple providers to find the best rate for you
  • Save Time – Our experts will do all the work so you don’t have to waste time researching and understanding complex insurance jargon.

Not sure if Cyber Liability Insurance is for your business? Here are some examples of when this insurance can help save your business from thousands of dollars in legal costs and potential damage payments.

Scenario 1

IT Mavens, Inc.
Revenues: $3.3M
Tech E&O Limit: $2M per claim / $2M aggregate
Tech E&O Deductible: $5,000

IT Mavens, Inc. entered into an agreement with a school to provide IT services on an ongoing basis. After completion of some smaller projects, it was discovered that the school’s backup system was outdated, so IT Mavens provided a quote with multiple recommendations to update it. A few months after declining the proposal for the new system, the existing backup system failed, and the school lost a number of student and financial records. Upon the failure of the backup system, the school did not pay IT Mavens for its completed work. They filed suit demanding payment, and the school subsequently filed a countersuit alleging that IT Maven’s completed work caused the failed backup system. The case was settled before it went to trial; however substantial legal costs were incurred.

Defense costs: $85,000
Potential out of pocket expenses incurred without Tech E&O coverage: $85,000

Scenario 2

Software Experts, Inc.
Revenues: $4.4M
Tech E&O Limit: $1M per claim / $1M aggregate
Tech E&O Deductible: $5,000
Cyber Security Limits: $100,000 Security Breach Expense / $1M Electronic Information Security Liability / $1M Electronic Media Liability
Security Breach Expense Deductible: $2,500
Electronic Information Security Liability Deductible: $5,000
Electronic Media Liability Deductible: $5,000

Software Experts, Inc. – a developer of inventory management software for retail industry – entered into a three-year contract with a clothing retailer to implement its state-of-the-art inventory management software. The company was also contracted to redesign its customer’s website. Mid-way through the three-year project, some of the already implemented components of the software weren’t working as they were intended to causing inventory shortages and lost sales. Also, soon after the website was completed, the customer received a letter alleging copyright infringement because Software Experts had not obtained permission to use some of the images it had put on its customer’s website. As a result, Software Experts Tech E&O and Cyber Security policies were triggered and substantial defense and damage payments were incurred.

Defense Costs – E&O claim: $150,000
Damages – E&O claim: $275,000
Defense Costs – electronic media liability claim: $74,000
Damages – electronic media liability claim: $100,000
Potential out of pocket expenses incurred without Tech E&O + Cyber Security coverage: $599,500

Still not convinced? Ask one of our experts how this insurance could help your business! Call 703.790.5770 or fill out the form on the right to get started.

Frequently Asked Questions

Do we still need cyber security insurance even if we don’t host the data ourselves?

A We recommend that you take a close look at all your contracts. Generally, you are still legally liable even if you store your data in the cloud.Back to Top

Why do I need cyber liability insurance when I already have a general liability policy?

Ans: General liability insurance policies normally exclude losses caused due to the Internet so cyber security insurance is still needed. We do recommend that you ensure that your policy includes coverage of mobile phones and laptops.Back to Top

Do I really need cyber security insurance as a small business owner?

A  The short answer is Yes! According to a recent study by U.S. Secret Service and Verizon Communications, Inc., over 72% of all data breachers occurred in small and medium sized businesses.

Cyber security insurance not only protects you from liability, and litigation but also offers business interruption coverage, which can be important for small, less diversified businesses.Back to Top

Do you have suggestions on how we can keep our premiums low?

A  Sure. There are several things that a business can do to lower their premiums. We recommend that you begin by investing in a strong password management strategy.

Businesses should also conduct regular risk assessments to indentify hardware, software and website vulnerabilities.

Secure your mobile devices and networks through use of anti-virus software, virtual private networks and firewalls.Back to Top