Insuring against Cyber Risk and Computer Crime

Source: sadlerco.com - Insuring against Cyber Risk and Computer Crime
Author: John M. Sadler

What’s the difference?

Because we live and work in a computer-dependent world, every organization is at risk from cyber criminals and needs to take steps to protect critical data. Cyber criminals are adept at finding endless ways of infiltrating computers and stealing both funds and data. It’s important to understand how Cyber Risk and Computer Crime coverage are different and the protection each offers.

Cyber Risk insurance is protection against stolen information criminals use to perpetuate fraud. Stolen social security numbers, credit card numbers, or health records enable them to make unauthorized purchases, obtain prescription drugs to be resold, submit fraudulent medical bills, and even resell the stolen information to other criminals. A Cyber Risk policy protects you from third-party lawsuits and covers the cost of investigating the data breach, notifying customers of the breach and providing credit monitoring services. It does not cover the theft of money or securities.

 Cyber crime occurs when computer hackers illegally transfer funds or get the bank to transfer funds by fraudulent means. A commercial crime policy should offer Computer Crime and Funds Transfer Fraud protection as standard options. If your company holds any customer funds, it’s critical that you verify those funds are also protected under your policy.

Unfortunately, employees sometimes respond to emails from people impersonating trusted clients or vendors, which is known as “phishing.”  These imposters induce employees to transfer funds or provide information. It’s important to understand that funds voluntarily transferred to third parties by fraudulent inducement may not be covered. Your company is responsible for determining the authenticity of such requests.

On the other hand, Social Engineering coverage is a commercial crime policy endorsement  that protects against such scams. Though usually sublimited at $250,000, higher limits may be possible for specific risks. You might be able to obtain a separate agreement for coverage of theft by phishing and impersonation scams.

No matter the size of your organization or how much customer information is stored in your computer system, you need proper protection. Call one of Sadler’s insurance experts today at (800) 622-7370 to assess your needs and get a quick quote.

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