23 Dec What Type of Cyber Insurance Do You and Your Clients Need?
Guest blog by Jason Boney, Head of Sales at Cysurance
One of the most dynamic threats businesses face today is cyber risk. As an MSP, your clients likely face this critical exposure, regardless of what industry they are in. It has become such a unique peril that traditional insurance policies are now excluding it. In response, standalone cyber insurance is evolving with coverages and products tailored to the varying needs of companies in the modern economy.
The Risks to You and Your Clients
Companies today need sound cyber risk management – especially as COVID-19 and remote workforces redefine the threat landscape yet again. The heightened activity of hackers and the increased risk of insider threats put businesses at risk every day. The costs of a data breach can be catastrophic to a small business – 60 percent of those suffering such an incident go out of business within six months.
First-party cyber insurance will reimburse most of a company’s costs associated with responding to a breach, such as legal and forensic services that determine the extent of the event and the appropriate response. It also covers contractual requirements, notification of affected parties, the provisioning of identity monitoring services, PR firms and more. Insurance coverage for business interruptions, contingent business interruptions and extra expenses protects against lost revenue and remediation costs that result from your or your supplier’s downed network. Digital data recovery expenses can also be included.
Data breaches can also result in legal liability for failing to protect confidential data. Third-party liability coverage protects you from unintentional violations of privacy regulations, unauthorized access, use or denial of a computer network, or the unintentional transmission of malicious code. It can also pay regulatory fines, Payment Card Industry assessments, and costs and damages related to electronic, social or printed media liability such as copyright infringement.
Another important coverage is cybercrime. This insuring clause deals explicitly with the theft of monies or securities via fraudulent funds transfer, computer fraud, or social engineering fraud. Instead of compensating for the loss of intangible assets like data, it reimburses you for the loss of financial instruments via fraudulent electronic transactions. Examples of these losses could be when a third-party accesses your network and steal funds or an employee is tricked into an unauthorized transfer from your account.
Tech Errors & Omissions Coverage
Just like doctors, lawyers, architects and other specialized professionals, MSPs have unique exposures. In addition to cyber insurance, you should also invest in Technology Errors & Omissions (E&O) coverage. These policies can protect MSPs from professional liability that arises from system architecture, software development, hardware integration, application services, data processing and other general technology services.
A Tech E&O policy includes a specific insuring clause for, and a broadened definition of, technology incidents. It covers any error, act, or breach of duty – including personal injury – in an insured’s rendering of technology services or products. Such services can include technology assessment, design, staffing, hosting, support and more, as well as data processing and telecommunication services. Technology products are hardware, software, or systems (and the data therein) leased, licensed, sold, or distributed to others by, or on behalf, of an insured.
This coverage can also carve back exclusions in cyber policies for breach of contract, intellectual property and product recall. These protections are critical for the unique exposures MSPs face, such as unintentional delays or failures of technology delivery, or a customer’s loss of technology use due to a software copyright infringement allegation or product recall.
Protect Yourself and Your Clients
No matter the business, cyber insurance is a must in today’s connected world. Most of your clients can find adequate protection through first-party and third-party, and cybercrime coverages. However, as an MSP, you should ensure your policy is fit-for-purpose by purchasing Tech E&O coverage as well. With appropriate coverage acting as a safety net around robust cybersecurity and cyber best practices, modern businesses can improve resiliency and drive profitable growth.
Jason Boney is Head of Sales at Cysurance, a next-generation platform delivering cyber insurance-as-a-service to MSPs and their clients. Cysurance partners with RapidFire Tools to allow MSPs to quickly and easily bind cyber risk policies for clients. For more on how Cysurance streamlines insurance enrollment and claims settlement for MSPs and their clients, speak to your RapidFire Tools representative.
For a deeper look into how you can offer cyber liability insurance services for your clients, download our e-book: The Next Big Growth Opportunity: Compliance for Cyber Liability Insurance.