The advent of the Information Age has created new risks for businesses as they send, receive, and store data digitally. Assuming your business relies on digital information in at least some capacity, it likely needs cyber liability insurance. Here’s why.
Commercial Property Insurance Is for Physical Property
Commercial property insurance is a common protection that many businesses have, and it insures various types of physical property. The exact items that a policy insures are determined by its terms and conditions, but the protections often can include computers, external hard drives, servers, and similar electronic equipment.
Any protection that a commercial property policy provides for electronic equipment, however, is limited to only that physical equipment. The electronic data stored on that equipment isn’t normally included in a policy’s protections.
While you may already have commercial property insurance in place for your business, you can’t rely on this to protect your business’ digital assets. Should a fire destroy all your computers, a policy might pay to replace the computers and associated hardware. Any software or files that were kept on those destroyed computers will be lost, though.
Valuable Papers Insurance Is for Important Hard Copies
For protecting important hard copies of documents, valuable papers insurance has been widely available for a long time and will serve your business well.
Whereas commercial property insurance protects up to the value of the physical property, valuable papers insurance recognizes that the value of a paper isn’t in the paper itself but the information printed on that paper. This insurance provides protection in the event that important papers are lost in a covered claim.
The protection afforded by valuable papers insurance is limited to only physical documents, though. It doesn’t extend to electronic documents or digital data.
In the event of a devastating fire, this insurance would compensate your business for the loss of incorporating documents, financial records, client files, and other essential papers so long as the documents lost were all hard copies. It wouldn’t do anything to help you recover electronic records of client information or company financial transactions.
Cyber Liability Insurance Is for Digital Data
To protect electronic documents and other digital data, your business needs cyber liability insurance. This insurance can extend protection to almost any digital asset, such as client files, project mock-ups, financial histories, and many other items. Importantly, cyber liability insurance also protects the insured digital information in a variety of situations.
First, a policy will protect digital assets from traditional hacking attempts and similar malicious attacks. For instance, a policy will help you replace or recover data that’s lost if a hacker or virus gets into your company server and destroys all your company information.
Second, a policy will also protect against instances where data is compromised through a nonmalicious incident. For example, a work laptop that’s forgotten at an airport cafe leaves the data on that computer unprotected even if no one intentionally steals the laptop. Depending on the incident’s specifics, a policy may help recover lost files and compensate affected parties.
Finally, some policies will also cover incidents where digital data is taken hostage by ransomware. If your business can’t access files because a nefarious program locks them up, a policy might help you recover those files.
Many Businesses Have Digital Information That Needs Protection
No matter what type of business you run, don’t immediately assume that the protections cyber liability insurance provides aren’t necessary because your business doesn’t have much digital information. Many businesses have digital information that should be protected:
- Medical practices keep patient files
- Banks store financial records
- Stores transmit credit card numbers
- Counselors record client cases
- Consultants send project notes
If your business has any digital information, it needs insurance to protect that data.
For help finding cyber liability insurance that suits your business’ needs, contact Family Insurance Centers.