Not Your Father’s Business: 5 Reasons Why You Need Cyber Insurance

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This is a photo of Bob Knowles Jr. with his father from 1985.  It was taken outside of the “new” office that we still occupy today on Penn Ave in Scranton, PA.   Cyber Insurance was not on anyone’s radar back then.  In fact, very few households had a personal computer.  As a business owner,  you know that there are a lot of threats to your success and expenses associated with owning a business.  Sometimes the most dangerous of the these threats are the ones that you do not know about.

When it comes to protecting your business, the most common type of risk management tool is insurance.  Unfortunately, many business owners don’t look beyond the basics.  They understand the need for property, general liability, and workers compensation insurance; and try to get coverage for a price they can afford.   They secure a policy, then renew coverage per expiring year after year; periodically checking the price of current coverage, and adjusting for basic changes like property improvements or increased sales.

In today’s data-driven world, organizations of all sizes are vulnerable to costly exposures to loss that did not exist 30, 20 or even 15 years ago.  Knowles Associates can identify these emerging issues and provide you with a combination of coverage best suited to your needs.  Getting a comprehensive insurance review to identify threats is part of being a responsible business owner.

Cyber Insurance: What is it?

Cyber Insurance is sometimes referred to as cyber liability.  It is a term used to describe the the type of insurance that protects your business’s assets, customer information, and employees from data breach associated with electronic activities.  At Knowles Associates we work closely with our carrier partners to offer products that protect businesses of all sizes.  Below, Travelers Insurance offers the brief but informative explanation of cyber liability and the risks that couldn’t have been contemplated just a few years ago.

Why Do I Need It?

1.  You Store Employee or Customer Information

Personally Identifiable Information

If you collect any of the above information for your employees or customers, you are in control of personally identifiable information.  There are federal and state privacy data breach laws that require specific steps to notify employees or customers in the case of a suspected data breach.  Notification expense is generally the most expensive part of the claim.

2. People Make Mistakes

computer mistakeMost data breaches involve employee mistakes.  Something as simple as a lost lap top can be a critical mistake to a business owner.  Additionally, employees can also mistakenly open an unauthorized email containing malware which could cripple operations.  One type of cyber coverage, funds transfer fraud, protects your business from employees that are tricked into releasing your company funds via social engineering.  This type of cyber crime is common, and can be expensive.

3.  You Accept Credit Cards or Electronic Payments

cyber insuranceSome of the most well-known cyber crime events include large retailers, like Target.  However, businesses of all sizes have a legal obligation to protect financial information.  Many businesses think that because they use a third party vendor to process the payment, they are immune from this exposure.  In Pennsylvania, the business owner can be included in a claim for data breach simply because they processed the card at the point of sale.  Additionally, you may be held liable for for third-party data breaches.

4.  Your Business Has a Website

If you use a business website to transact business, you face the additional risk of business interruption due to denial of service attacks.  Even if you don’t sell your product online, material posted electronically increases your risk of trademark or copyright infringement.  Knowles Associates can secure a policy including media liability to cover these types of risks associated with cyber insurance.

5.  You Want to Protect Your Reputation

business reputationKnowles Associates works hard and takes pride in our reputation.  Data breaches cause instant harm to your reputation.  Without cyber insurance your multi-generational business may lose everything.  It’s not just current customers that are at stake, future customers are unlikely to do business with someone that doesn’t do enough to protect their clients.  Some policies include coverage for the period of time that profits are decreased due to this damage.

Getting a cyber liability quote is easy.  Most businesses can be quoted based on their revenue and a few qualifying underwriting questions.  Contact us today for your free insurance review to see how we can protect your business from Cyber Crime and other emerging trends.

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