Virtual Risks in a Virtual World: How Can Cyber-Insurance Work for Your or Your Business

By: Eric Erickson Friday November 29, 2013 comments

Our lives and our property are increasingly dependent on electronic data. As business owners and homeowners, we tend to store more and more of our important data on computers. And, more and more individuals rely on shared electronic information for their work. Because of this, our personal property no longer consists primarily of valuable items or essential equipment. This virtual information is continually at risk of cyber-theft. 

Normally, only large companies are at major risk of an electronic security breach, but insurance carriers are styling liability coverage limits to suit a wider range of personal and professional interests. Even if your business can afford to employ skillful information technology specialists, or install sophisticated network security systems, the general consensus is that some type of cyber invasion is inevitable. Currently, many commercial insurance plans cover some level of cyber protection, but extensive protection often means high premiums, something that can certainly scare away small and mid-size business owners and individual policyholders.

Property or Casualty – The Nature of Cyber Crime

Standard property coverage for homeowners and businesses usually doesn’t offer much in the way of cyber protection. Internet hackers often have more than mere money in their sights, but the results can be just as financially destructive. Sometimes data is the object of cyber theft, stealing private information such as employee social security numbers or bank account information of business owners and private individuals. 

Another type of cyber security breach is simply meant to inhibit your normal business processes. Implanting viruses, worms, or “Trojan horses” can devastate networks, slowing down your business and jeopardizing the delivery of goods or services. As networks grow more sophisticated, information is passed more quickly. Advances in network technology have allowed businesses to streamline costs and chase greater profits, but the cyber threat has also increased, leaving businesses at serious financial risk.

Cyber Mitigation

Large companies have the resources to develop effective password protection systems, and internet security systems that provide a virtual wall between their business and threats from cyberspace. But, large companies also have the resources to rebound after a loss, while small business owners can be truly devastated by cybercrimes. Cost is also the reason many small business owners avoid paying higher premiums to have additional coverage for cyber liability insurance.

Mitigating cybercrime is the best way to reduce your premiums. You may not always be able to stop the planet’s most diabolical hackers, but the combination of up-to-date protection and expanded liability coverage limits can mean the difference between massive financial losses and financial security. When you call to get independent insurance quotes for your home or business, ask about the ways in which insurance carriers protect your business with cyber liability coverage. Here are just some of the ways you can diminish the threat of cyber threat:

  • Password Protection. One of the most obvious ways to protect data on your network is with specially designed password encryption. 
  • Data Backup. Your information will always be at some risk of breach. Cyber security includes backup disks and drives that can help you get your business back on line after a breach.
  • Monitoring. As a business owner, you want to be able to see what thieves can. Software protection systems that monitor unusual or suspicious activity can be helpful in preventing cyber-attacks and uncovering weaknesses in your system.

Many insurance carriers develop their own security and detection systems to compliment additional policy coverage. For instance, Travelers Insurance offers additional property and casualty coverage along with specialized security systems. MetLife Insurance offers a guaranteed security system that they back up with $5 million in coverage protection. Although cyber theft continues to be on the rise, insurance providers are working hard to decrease consumer liability by preventing or limiting the damage that can be done to your network.

Searching for the Right Policy

Insurance is often the last thing we think of when our business grows in new and innovative ways. Goods are purchased and services are offered in an increasingly complex and vulnerable online world. As you consider your coverage limits, think about how your property and casualty policy can work for your business’s reality in the 21st century.

Insurance protects your business and home in a variety of ways. Coverage limit options allow you to structure property coverage and casualty coverage to include liability in ways you may not have considered. It may not be enough to protect your data with hard copies or a backup disc. When you call your Insurance By Phone representative, your independent insurance quote can include coverage for the uncertainty of the virtual world.

Eric Erickson

About the Author: Eric Erickson

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