In August 2019, a widespread, coordinated ransomware attack hit 22 towns in Texas, crippling their computer systems and triggering a federal investigation. While no ransom was paid and all systems are now back to normal, the incident was a wake-up call for Texas businesses to take the risks to their livelihoods more seriously.
When the next assault hits, will your business survive? Fortunately, you can prepare for the worst by getting cyber liability insurance, a type of insurance that covers financial losses due to data breaches or other cyber incidents.
Why you need cyber liability insurance
In 1995, Omni, a buyer and seller of steel coil, sued Brown & Brown of Texas, Inc. and their insurance provider Transcontinental Insurance for refusing to cover over $2M in damages due to fires in the storage facility owned by Brown & Brown. Brown & Brown justified its decision to not grant coverage by citing that the policy didn’t cover metals that have been in storage for over 60 days. Transcontinental Insurance, meanwhile, pinned the blame on Omni for not reading the terms of the insurance. The court ruled in favor of the defendants.
This ruling was reversed in 2005 after evidence showed that Transcoastal Insurance knowingly withheld information from Omni regarding their policy: the agent told Omni they were protected from “all risk” although they were not. The defendants appealed, and now, more than twenty years later, the final verdict is yet to be passed.
Omni’s case with Brown & Brown and Transcoastal Insurance shows the importance of getting insurance only from agents you trust to avoid hefty attorney fees and decades of scrupulous litigation.
In recent years, this culture of transparency and trust regarding business insurance has grown in Texas. Now, vendors may need you to show your cyber liability insurance policy before they work with you so that they’ll know if your company — and by extension, they themselves — are protected by risks present in the digital world. It’s therefore crucial that you ask your agent to disclose the terms of your policy.
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What does a cyber liability insurance cover?
Like any insurance, the coverage of each cyber liability policy varies. Some policies may cover perils like malware, but other policies may not. These are the expenses a cyber liability insurance policy is most likely to cover:
- Electronic data loss or damage – If your data was damaged or stolen because of distributed denial of service (DDoS) attacks, viruses, or IP theft, your policy may cover data recovery or data retrieval costs. It may also pay for the costs of hiring experts who will reconstruct, repossess, or salvage your data.
- Loss of income or extra expenses – Cyberattacks can paralyze your systems and shut your business down for a period of time. To guarantee that your business doesn’t immediately close its doors for good, most policies cover your income for a period of time. However, your situation must fall under a covered peril, like business interruption due to hardware failure, to qualify for this coverage.
- Extortion fees – If your systems are attacked by ransomware and the perpetrator threatens to destroy or leak your data unless you pay a ransom, your cyber liability insurance may cover the ransom necessary to get your files back.
- Notification costs – The recently amended Texas Data Breach Notification Law now requires businesses to notify the attorney general if a breach affects more than 250 people. This is on top of having to notify every customer whose data was compromised. Needless to say, notifying victims can eat into a huge part of your savings. Some policies therefore cover the hiring of an attorney who will oversee your notification compliance. Moreover, some policies cover the amount necessary to set up credit monitoring services and call centers for data breach victims.
- Reputational damage – It takes only one data breach to destroy your firm’s reputation. Some policies will cover marketing- and PR-related expenses to clear your name and lessen reputation damage.
Why you should make cybersecurity your business
As a business leader, you must commit to the highest level of security in every aspect of your business, from your computer systems to your mobile devices. With a cyber liability insurance, you’re sure that you’ve covered all weak points and protected your data.
Want to learn more about how to protect your business and your technology? Terminal B can help. We are one of only 300 Microsoft Direct Cloud Solution Provider (CSP) Partners in the United States, and we are also one of the largest CSP Partners in the State of Texas. Call us at (512) 686-0957 or reach out to us today.