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2015 Trend Alert: Cyber Liability

2015 Trend Alert: Cyber Liability

As the internet continues to grow, B2C and B2B businesses alike are increasingly using the internet to grow their customer base, manage operations and share information. With this expansion comes the increased likelihood of hacking and data breaches.  In 2014 alone, Community Health Systems, Home Depot, and even the US government experienced cyber attacks and data breaches.

Cyber Crime Is On The Rise

The average company is compromised every 4 days.  These cyber attacks include malware, Trojan viruses, lost or stolen equipment, website attacks and malicious insiders.  Sadly, your virus protection software can’t protect you from all of these threats.

The California Office of the Attorney General released a report that said the records of 18.5 million California residents were breached in 2013, up a staggering 600 percent from 2012.  The global economy internet economy is calculated at around 2-3 trillion dollars, with cyber crime extracting around 20% of that value.  That is a lot of money lost over time.

It Isn’t Just Big Businesses That Are Vulnerable To Hackers

Cybersecurity firm Symantec ran a major study in 2013 that surprised many experts. The study found that 31% of all cyber attacks in 2012 were on firms with fewer than 250 employees.  Small business has been blindsided by these attacks; unaware and ill-prepared for the threat.

Small businesses are often the subject of cyber attacks because they don’t employ the same high-end security employed by larger businesses, and they rarely have access to risk managers who can keep on top of cyber security.  Even your business is at risk.

Cyber Crime Can Cost More Than You Think

Consider these claim examples:

  • An employee takes home a laptop containing client information and the laptop goes missing.  Investigation is ongoing.  Pending lawsuits filed by customers with compromised data results in legal expenses of over $500,000.
  • A hospital employee gains unauthorized access to client medical records and discusses a patient’s HIV status with others.  Hospital was found liable in the amount of $250,000 plus nearly $100,000 in legal expenses.

These claims are enough to take down even a mid-sized business permanently.

These Cyber Crimes Aren’t Covered Under Your liability Or Property Insurance

Commercial general liability policies do have provisions for personal and advertising injury and property damage, which may offer some coverage, but it is dependent on court interpretation, which is a costly risk to take.  Commercial property insurance may cover the cost of a lost or stolen laptop or computer, but not the data on the equipment.  Even your crime policy might not contain the right coverage provisions, or high enough limits to protect you.

How To Manage Cyber Liability Risks

The best way to protect yourself and your business is to start a conversation with a risk manager who can assess your specific cyber liability risks. If you’re like many Owners and GM’s, you’re not a subject matter expert in cyber liability, but you pick up the phone and talk to a risk manager about the business operations you manage online. This is a great place to get started.

At Hayes Brokers, we pride ourselves on being risk managers for our clients. When we identify considerable risk, we typically recommend a cyber liability insurance policy in addition to other widely used best practices.  These policies can cover not just your computers and mobile equipment, but the data contained within, the expense of notifying your clients of the loss, and other costs associated with a cyber crime.


  1. The Cyber Risk to Worry About | Hayes Brokers - […] have written on this blog many times about the importance of cyber liability insurance for businesses. Even with all…

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