fewer than 250 employees, according
to a June 2012 study conducted by
cybersecurity firm Symantec. That
rate has doubled from a year ago.
If your business is attacked, your
customers have more recourse than
they once did. Forty-six states and
the District of Columbia now have
breach notification laws requiring
businesses that store personal customer information to notify customers when their information has
been compromised. A handful of
states are more stringent, requiring
businesses to have a written security
policy and specific kinds of security
controls in place.
face in the event they are hacked.
That means it will pay the policyholder for the material costs of a
break-in, some legal fees, and fees
for forensic analysis, which is used
to determine the nature and extent
of the break-in.
Third-party coverage is for the
liability related to a breach in security or privacy. This includes the
lawsuits that may result if customer
data is leaked via a security breach,
malware, virus, or other negligence
on the part of the company.
Generally, cyberinsurance is
divided into two types of coverage—first party and third party.
First-party coverage insures businesses against the costs they may
By the numbers
In 2011, there were
more than 414 reported
cybersecurity breaches that
exposed roughly 23 million
confidential records. Here’s a
look at some of the costs that
occur when privacy is lost:
Average total cost of a security breach:
Average cost of a legal defense:
Average legal settlement:
Which industries are affected most
by cybersecurity lawsuits?
The cost of cyberinsurance
varies depending on the size of your
business and the industry you are
in, as well as the amount and type
of information your business stores.
“A key metric to look at is the type
of business you are in and how
much personal information you
have in your care, custody,
and control,” says David
Beyer, managing member
of Digital Risk Resources, a
Novato, California, company
that develops cyberinsurance
products for insurance com-
panies. Beyer says, “If there
are lots of employees and lots
of information, the greater
the exposure is.”
Of course, all businesses
have an obligation to protect
customer data, but businesses
such as restaurants and retail-
ers may require less coverage
than do financial institutions
and medical companies,
which have reams of data
about their customers and
stricter privacy laws to follow.
Coverage typically comes
in preset amounts determined
by the insurance carrier. You
should expect to pay less than
$150 annually for about
$25,000 worth of coverage.
coverage, the annual premium
can be thousands of dollars.
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