Between January of 2005 and June of 2020, 285 data breaches were identified in the state of Maryland. These breaches resulted in more than 388 million records lost or stolen. According to an IBM study, every record stolen equates to about $150 in liability costs. That is why cyber liability insurance is so important.
No matter its size, if your company stores sensitive third-party information electronically, it is at risk. Talk to an independent insurance agent in Maryland to learn how a cyber liability insurance policy can help your business manage the financial ramifications if criminals access its computer system.
What Is Cyber Liability Insurance?
Cyber liability insurance is a relatively new insurance product that was designed to protect businesses from financial losses and liabilities related to cyberattacks and data breaches.
Cases of data breaches and cybercrimes are on the rise. Any business that uses computers is at risk. Even if your company is safeguarded by firewalls and other security measures, cybercriminals are constantly developing sophisticated ways to access protected information.
Additionally, the costs associated with cyberattacks are also on the rise. The 2019 Hiscox Cyber Readiness Report revealed that the average cost of cybercrime in the US currently stands at about $119,000 per incident. Most small businesses cannot withstand a financial loss of that size without insurance backing them up.
Independent agents can help you find a cyber liability insurance policy that is suitable for your Maryland business.
How Much Does Cyber Liability Insurance Cost in Maryland?
Maryland is the 12th highest rate of cybercrime in the nation, so rates in this state may be a bit higher than in many other parts of the country.
On average, a cyber liability insurance policy that provides $1 million worth of coverage with a $10,000 deductible will cost your business about $1,500 a year. Of course, smaller businesses with lower risks and fewer records will pay much less than this.
Some of the many factors that can influence how much a cyber liability insurance policy will cost for your company can include the following.
- The type of company you own and the industry in which it operates
- Your company’s size and average annual revenues
- The amount of data your company stores and its level of sensitivity
- The cyber security measures your company has in place to protect against data theft
- The amount of coverage you are purchasing
- The size of your policy’s deductible
Every insurance company has its own way of calculating rates, so it pays to compare quotes from a few competing insurers before choosing a policy. Independent insurance agents in Maryland make comparison shopping easy.
Who in Maryland Needs Cyber Liability Insurance?
From large law firms and banks to small businesses run out of people’s homes, any business that stores third-party personal and/or financial data electronically can benefit from having a cyber liability insurance policy.
Small business owners may feel that their companies are too small to attract the notice of cybercriminals. However, a study conducted by the Solvere One security firm found that cyberattacks on small businesses are expected to cost these companies more than $5 trillion in losses over the next five years.
No matter what type of business you own or how large or small it is, if you electronically manage other people’s sensitive data, you should strongly consider protecting your company with a cyber liability insurance policy.
What Does Cyber Liability Insurance Cover?
While there may be some variations in what policies from different insurance companies will cover, you can expect most cyber liability policies to cover the following.
- Notification costs: If your company experienced a data breach, you are obligated to reach out to all affected individuals to alert them of the breach. Depending on how many people have been affected, notification efforts can grow quite costly.
- Restitution to affected individuals: Your company will be required to cover the cost of credit monitoring and/or identity restoration services for anyone who may have been affected by the breach.
- System recovery costs: Your insurance can cover the cost to repair your computer systems and restore lost data.
- Regulatory fines and/or penalties: If the data breach occurred because your company failed to meet compliance requirements, this can cover the resultant fines.
- Fees for legal defense representation: This coverage is particularly valuable if several people were affected and your company is hit with a class action lawsuit.
- Reputation recovery: Your insurance can cover the cost of paying for a public relations firm to help with restoring your company’s reputation and standing.
- Cyber extortion costs: Your insurance can cover costs associated with negotiating with cybercriminals and paying their ransomware demands if necessary.
- Business interruption coverage: This can cover losses in revenue if your computer system is rendered unusable for a substantial amount of time.
A local independent agent can help you find a comprehensive, yet competitively priced, policy and can ensure that you fully understand the scope of coverage it provides.
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What Does Cyber Liability Insurance Not Cover?
As with any kind of insurance policy, cyber liability insurance has some exclusions. For instance, you should not expect your policy to cover the following.
- Financial losses due to lower potential future profits
- Devaluation of your company’s intellectual property because of the breach
- Funds spent improving or upgrading your technology systems and/or security software
When you work with an independent agent, you will have access to an insurance professional who can explain all the details of what your policy will and will not cover.
Examples of Cyber Liability Claims in Maryland
In 2018, Maryland-based Marriot International experienced one of the largest data breaches in US history when more than 380 million customer records were accessed by hackers. This incident resulted in billions of dollars worth of liability losses.
There are several different ways cybercriminals can access your customers’ information.
- Hacking: This is when cybercriminals find a way to break through your company’s firewall and other security features and successfully access your data.
- Phishing: This is when cybercriminals use social engineering tactics to trick people who work at your company into providing information that enables them to access passwords and/or secured computer files.
- Malware attacks: This is when cybercriminals find a way to install malicious code in your company's computer system. This is often done through phishing techniques. This code can allow the criminals to not only view and access sensitive data but also to completely hijack your system and files and then demand a ransom to be paid before it can be restored.
- Skimmers: Criminals sometimes manage to attach what are known as skimmers to credit card readers. This most commonly happens at gas pumps. With the skimmers installed, cyber criminals can retrieve credit card data and PIN numbers and can access customer funds.
Every business that uses computers is vulnerable to cyberattacks and data breaches. Be sure that you have a good cyber liability insurance policy in place to help your company deal with the aftermath if this crime happens to you.
How to Find the Best Cyber Liability Insurance Coverage in Maryland
If you are shopping for a cyber liability insurance policy for your Maryland company, a local independent insurance agent can help. These agents don’t work for a particular insurance provider, so they are free to shop around to find you a reliable policy at a competitive price.
There are more than 200 independent agents with offices in Maryland. Set up an obligation-free consultation with an insurance agent near you to get more information about cyber liability insurance as well as any other business insurance products that may be beneficial to your company.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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