Does Your Insurance Cover These Surprising Costs of Cyber Security Breaches?

Cyber risk has gained a significant amount of publicity recently, with many well-known companies facing potential lawsuits over security breaches. At this point, it is undeniable that businesses working with sensitive data need to carry specialized insurance coverage to address the risk. Many businesses, however, may be settling for policies that don’t protect against the full financial consequences of security breaches.

 

Possible Costs After Security Breaches

 

Many business owners recognize the potential for liability lawsuits and even fines after a security breach. However, many people fail to appreciate other costs that may arise, including:

 

  • The cost of notifying potentially affected clients, which may be significant for a business with a large client base.
  • The expense of setting up a client support center, providing services such as credit monitoring, or taking other steps to ensure legal compliance.
  • The cost of investigating the incident and making the changes needed to eliminate cyber risk.
  • The expense of building the company’s reputation back up or attracting new clients.

 

Insurance coverage for these expenses is available, but a standard policy likely will not provide it.

 

Addressing Other Potential Expenses

 

Other costs associated with cyber breaches may need to be covered through complementary insurance policies. For instance, business interruption insurance could address the revenue lost during business disruption or the cost of bringing operations back online. Business owners should make sure to work closely with an insurance agent to understand the available options, analyze the potential risks, and choose the policy that offers the most comprehensive protection.

Categories: Cyber Risk, Insurance
This post was written by , posted on July 2, 2014 Wednesday at 8:30 am

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