Specialty Insurance Blog

Cyber Risk Insurance – Why?

We have been asked by our clients to explain Cyber Risk Insurance in simple terms, and in a way that they can explain the coverage to their customers.  Our clients have found this useful:

What is it?  Cyber Risk insurance provides protection from loss or inadvertent disclosure of confidential information such as clients’ or employees’ social security numbers, bank account numbers or credit card numbers, and from damage to or destruction of computer systems from computer viruses or hacking.  Additional protection may be provided for electronic theft of money and liability from electronic media.

What does it cover?  The obvious exposure is a data breach, an unintended loss or release of confidential data.  Breaches can occur because of hacking, but the majority of breaches are the result of employee errors – lost laptops & password releases. 

What does a breach cost?  Because of state regulation, notices are required for breaches involving specific types of personal information.  So breaches can be expensive due to the volume of data and the notice requirements.  Cyber Risk policies typically cover the direct costs to address a breach, plus legal expenses and settlements if you are sued.

Who needs it?  All organizations with confidential information or whose operations may be subject to disruption from the failure of technology should buy this coverage.  Who buys the coverage? – here are some examples of Cyber Risk accounts:

Doctors’ Office
Escrow Company
Contractor
Insurance Agency
Grocery Store
Museum
Bank
Restaurant
Zoo
Claims Administrator
Library
Medical Service Company
Communications Company

Is it already covered?  Cyber Risk coverage is not typically provided in standard policies.  In some cases Cyber Risk coverage is added (as an endorsement) to standard policies, but typically the limit is not adequate and the coverage is not as comprehensive as a standalone policy. 

How much does it cost?  Costs vary depending on the size and type of business, and the amount and type of information stored.  The process to get Cyber Risk coverage is (or can be) simple, and the cost is not expensive. 

Specialty Insurance Expertise: Tennant Risk Services
Supporting Insurance Entrepreneurship: Tennant Capital Partners

 

Insurance Coverage for Hiring Illegal Aliens

We were recently asked if we had ever come across coverage for unintentionally hiring illegal aliens.  Our client had been approached by a customer that hires employees in different locations on short notice, and typically has high turnover.  The employment procedures are designed to prevent this, but errors in the employment process were possible.

We have a number of markets that will provide coverage for immigration claims on a limited basis via endorsement on Employment Practices Liability Insurance (EPL).  The idea is to provide limited coverage for unintentional employment errors, such as incomplete verification that may result in violations of the Immigration Reform Act.

While your customer may never have a need for coverage from unintentionally hiring illegal aliens, you should know the coverage is available for many accounts.

Specialty Insurance Expertise: Tennant Risk Services
Supporting Insurance Entrepreneurship: Tennant Capital Partners 

 

 

Escrow Exposure & Cyber Risk Insurance



Title & escrow companies face Cyber exposures and should be buying Cyber Risk Insurance for protection.  While the cost of Cyber Risk insurance is not high, the consequences of being without can be.  Most Cyber Risk commentary focuses on the risk of data breach, which is a real exposure for many organizations including real estate companies.  However, a data breach is not the only risk.  Two recent lawsuits involving the theft of money from escrow companies using online banking systems demonstrate the threat and need for coverage:

Choice Escrow recently fell victim to the Zeus virus, and lost a significant sum of money from one of its escrow accounts.  According to reports and the lawsuit, hackers used the Zeus virus to steal Choice Escrow’s online banking access information, and wired $440,000 out of the escrow account to a foreign bank account.  Choice had to scramble to cover the stolen escrow monies, and is now suing its bank for the amount lost.

In a similar situation, Village View Escrow has sued a bank for the loss of $465,000 (see here, here, here).  Hackers used its online banking access information to initiate a series of wire transfers out of its accounts.  The escrow company had an email verification service, but it was disabled by hackers.

The exposure to theft of money is real, and with the right policy, theft of money by hackers can be covered through Cyber Risk Insurance. 

Cyber Risk insurance coverage provides protection from various risks associated with technology, including data breaches, but policy forms are not all the same.  Cyber Risk insurance is easy to obtain, provides broad protection and is inexpensive (see here, and our prior post here). 

Specialty Insurance Expertise: Tennant Risk Services

Supporting Insurance Entrepreneurship: Tennant Capital Partners