Cyber Insurance in San Francisco

For many business owners, Cyber Insurance protection is an after thought.  But it shouldn’t be, in today’s interconnected world it might just be your very first business insurance policy, especially in the Bay Area.

“I have got to get General Liability Insurance first”, most people think.  However they get GL and forget to follow up with Cyber.  This may very well be the best course of action.  But not necessarily. 

For some companies in some situations their Cyber Exposure might be greater than their General Liability exposure. Don’t believe me consider the Work from the Garage Internet Startup?

For most business owners, the moment that you start taking client credit card and or social security information and numbers you being to become exceptionally exposed.  If the social security credit rating company Equifax can get hacked into, doesn’t that mean that you can too?  Contrary to much of what you might hear, social security numbers get stolen even if the business does all of the right things.   For others, their cyber exposure may lay in the hacking of the Social Media accounts. 

First lets back up and review what Cyber Coverage Is:

According to IRMI Cyber and Privacy Insurance : ” policies are intended to cover a variety of both liability and property losses that may result when a business engages in various electronic activities, such as selling on the Internet or collecting data within its internal electronic network. ”  Source.

The explanation continues:  “cyber and privacy policies cover a business’ liability for a data breach in which the firm’s customers’ personal information, such as Social Security or credit card numbers, is exposed or stolen by a hacker or other criminal who has gained access to the firm’s electronic network. ” 

According to Nationwide: ” General liability insurance covers bodily injuries and property damage resulting from your products, services or operations. Cyber insurance is often excluded from a general liability policy.

Therefore its imperative to know that having a typical general liability policy does not really protect you from the theft of Social Security Numbers and Consumers Credit Card information. In order to begin to be protect you from this you need some sort of Cyber coverage.

Narrow or Broad Cyber Coverage:

Cyber coverage can be either narrow or broad in its’ coverage and simply knowing exactly where you are covered is one of the major issues. Examples of areas where Cyber Exposure exist include (but are not limited to):

  • Social Media Accounts and Post – Twitter, Facebook, Quora, Etc.
  • Various (Non Social) Multi Media – Adobe, Word, Paid Adverts.
  • Email Accounts and Servers – Cell Phones, Computer, Virtual ServersVarious  Digital Assets – “Hard to define but I will known it when I see it.”
  • Physical Computers, Servers, Video Cameras – What exactly happens if someone hacks into your webcam?
  • Numbers – Credit Card, Socials, Drivers License Numbers.
  • Financial and Other relevant or irrelevant data – Photos, Routing Numbers, FEIN, etc.

Running through this list, should make any business owner wonder where it ends.  The truth is that Cyber exposure does seem endless.  Many cyber policies are exceptionally limited in their coverage form.  Opting to only cover 1st party or third party exposure.So what is First and Third Party Insurance?

Investopedia explains it as thus: “Third-party insurance is essentially a form of liability insurance purchased by an insured (first party) from an insurer (second party) for protection against the claims of another (third party). ” Source.

“Three is a Party”

Basically the three parties are:

  • First Party- the Owner of the Business (the Insured)
  • Second Party – the Insurance Policy or Insurer
  • Third Party – An injured party

Automobile insurance is a classic (personal insurance) form of third party liability insurance that most people understand.  You drive a Toyota and hit a driver in a Tesla.  It is determined that you are responsible for the accident of the Tesla (and driver) who are the thrid party in this situation.  Your Insurance ends up paying out to a third party.  In the business world, it is very similar.  A client hands you their credit card information to make some sort of purchase from you.  The credit card information is then stolen from you and the client ends up suing you because of this.  Your client is the third party.
So is this the only reason that business need Cyber Coverage?  No not at all, that is just often the simplest explanation why.  A well written cyber policy can protect you from numbers other issues.

How Cyber Insurance Might Be able to Help Your Small Business:

Cyber Attack Insurance, a provider of Cyber Insurance can protect you from:

  • “PCI fines & assessments resulting from a failure in your security, data breach, or privacy violation.”
  • “Expenses to defend you and any damages resulting from your liability to a 3rd party, or for regulatory fines & penalties, multimedia wrongful acts (such as infringement, defamation, piracy, etc.) “
  • “Defense and damages from your liability to a 3rd party when a failure in your security results in physical damage or injury.”
  • “Failure of your technology service or product is the cause of loss.”
  • Computer Replacement
  • Fund Transfer Fraud

Of course there is far more to the insurance than just this simple list. Technically speaking the list is endless… There are just so many avenues. And more means and ways seem to self populate daily.

How to Procure Cyber Coverage in San Francisco:

If you already have a great insurance agent, they are often a terrific place to start. However if you have not already been offered a policy OR if you are a start up – you might need to start looking elsewhere.

Marindependent has an online resource that allows you to conveniently quote out your own Cyber policy from the comfort of your office (or home.)

If you have any issues with it, please feel free to contact us direct with your questions or just to walk you through it.

Thanks for Reading Cyber Coverage in the SF Bay:

Thanks for reading this important business insurance article. Feel free to contact us with any questions that you may have about procuring this important coverage.