How Having the Right Cyber Liability Insurance Can Make or Break Your Business
Posted on: October 31, 2017 by Signature Insurance Group
Immediately following any major cyber attack, tantalizing headlines declare losses in the tens to hundreds of millions of dollars. Whether it’s Anthem, Equifax, or Yahoo!, the initial reported numbers are incredible yet profoundly underestimated. The staggering cost of cyber attacks has companies worldwide waking up to the dire need for cyber liability insurance to alleviate the blow of these potentially business-ending crimes.
The 2013 cyber attack on big chain retailer Target, for example, was originally estimated to cost $191 million dollars, and most newsreaders’ interest stopped there. However, if you follow the company’s financial statements over time, you’ll soon see how today’s total cost related to the attack may be closer to $1 billion. Costs rising sharply over time also impacted Home Depot after its POS terminals were hacked in 2014. Initial projections showed the cost at $62 million. By 2017, Home Depot’s costs had ballooned to over $200 million. A large part of the continually inflating costs comes from class action lawsuits and claims instigated by major credit card companies.
Still, these astounding figures don’t show the full story. Both Target and Home Depot were responsible companies—they carried cyber liability insurance to protect against this very scenario. Target’s insurance covered half of the initial costs, while Home Depot’s covered $100 million. However, the policies they chose capped out well below their actual losses over time. They had cyber liability insurance, but they may not have had the right policy coverage. Like many other businesses, they may have completely underestimated the potential losses, leading them to be under-insured.
The truth is every company is susceptible to this coverage problem. Having cyber liability insurance is of paramount importance for all businesses, despite the fact that most policies do not cover every line item of damages. Breaking the fall is the real goal of any sound cyber liability policy. Like Target and Home Depot demonstrate, uncovered costs can still inflate over time and must be anticipated when selecting insurance.
The shortage of full coverage policies on the market doesn’t mean it’s okay to forego cyber liability insurance—the key is to choose a highly experienced agent with a specialized background in cyber liability policies. A qualified agent can find the right coverage and will clarify what costs can be covered and what losses are not protected. Even if your policy only covers half of the burden following an attack, this savings difference is often enough to save a business from going out altogether.
About Signature Insurance Group
Signature Insurance Group has been working since 1969 to provide comprehensive insurance solutions to individuals and businesses across the United States. We offer a range of insurance products and services in risk management, employee benefits, business insurance, and personal insurance, and we pride ourselves on our commitment to creating “Signature Relationships” with our clients where we commit to providing the best, most comprehensive service possible. To learn more about our goods and services, contact us today at (800) 464-3606.