Insurance Basics: Cyber Insurance
About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients starts with a focus on budgeting, insurance, optimizing employee benefits, investing, and retirement planning. Dream Financial Planning is a Fiduciary Financial Planning firm specifically designed to help individuals in their 30s and 40s take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals.
Am I At Risk Of Having My Identity Stolen Or Being A Victim Of Fraud?
There has been an increase in fraudulent and criminal activity. Now more than ever, you may be targeted financially through a variety of schemes. Download This Checklist. This will help guide the conversation regarding common threats and scams, ensuring that you're informed and actively protecting your identity and assets.
This checklist covers:
- Ways to minimize cyber threats
- Tips to identify common scams
- Steps to take if a client suspects unlawful activity
A data breach can damage more than just your small-business computer system – it also can damage your reputation and put your customers and/or employees at risk. That's why cyber insurance can be a smart precaution for any size business.
Ask yourself the following questions?
- Are your computers (and don't act like you're still doing payroll on an old 1978 calculator that's the size of a skateboard) hooked up to the Internet?
- Do you have financial data with banks that do online banking?
- Do you store customers' personal data on computers at your business?
- Heck, do you service or sell cars that hook up to the Internet? (You'd be surprised how many new ones do!)
If the answer is yes to any of these, you are exposed to cybercrimes. Yeah, that's a link to an FBI website.
So, let's see what risks you're exposed to and then talk about what cyber liability insurance can do to help you recover if something does happen.
Attacks on Your Business
There are several types of attacks that can hit any business.
Ransomware – This is an attack in which intruders get into your system and encrypt (or lock away behind a code) data that you need to run your business or personal life. These intruders typically ask for money in exchange for giving your data back, thus ransoming it. Some estimates say that there are over 4,000 attacks like this per day.
Denial-of-Service – This is an attack in which intruders overwhelm your system or website, causing it to crash repeatedly.
Malware – This is an attack in which a program is loaded onto your system without your knowledge, allowing intruders to steal information, gain access to systems, damage systems, or spread viruses.
Phishing – This is an attack in which an email contains an attachment or link that will download harmful programs onto your system.
Drive-by – This kind of attack hides on a questionable website and loads harmful programs onto any unprotected computer that accesses it.
There are many, many more types of cyberattacks, but the aforementioned attacks are common ways through which cybercriminals can slip between the cracks and gain access to your systems.
Now, let's look at what you have that they want.
What is Stolen?
Hackers, intruders, thieves—whatever you want to call them, they are looking for something valuable. There are several kinds of information they are looking for, and the most common are:
- Customer Personal Records – Such as names, addresses, Social Security numbers, or anything else they can sell to identity thieves.
- Financial Records – So they can take money directly from or charge items to your business.
- Security Information – This includes things like passwords, links, and other ways to access your business partners. Intruders may be looking not just for you but also for the big companies you buy from and do business with.
- The problem is that this isn't a bank heist. Thieves don't just sneak in, steal cash, and leave, taking only one thing. They take information and money at the same time.
This breach of information leaves you wide open to lawsuits and other penalties because it is a business's responsibility to protect its data and the data of its customers.
How Secure Are You?
Sure, you're connected to the Internet, and you have Wi-Fi for your customers. You take pictures of things on your phone and email them to your business. No big deal, right? You set everything up the way the guy at the cable company told you. The box with the blinking lights has a “firewall.” Isn't that what they said?
It's their job to make sure you're safe, right?
Unfortunately, the responsibility falls on you. You have to make sure that your computers, WiFi networks, and passwords are all safe from people who want to steal from you and your customers. The simple fact of the matter is that the law holds you accountable for your Internet and network safety. But what happens if you are attacked? What if you find yourself at the end of a huge loss? Or a massive lawsuit?
That's why you get cyber liability insurance.
How Cyber Liability Protects You
Cyber liability insurance protects you with a whole range of coverages that can prevent you from going out of business after a major data breach.
It can reimburse you for direct financial losses, pay for legal costs if you are sued, cover regulatory fines if you are found guilty of not protecting your information, and more. It can even help cover your business costs if you are disrupted and have to shut down due to an attack, such as a DoS or ransomware attack.
Just like the general liability insurance policy, cyber liability is a powerful, flexible piece of protection that can do so many things to keep you in business and get you back to where you were before an accident. It's a new era, and the old protections of the past aren't going to cut it. It's time to get with the times.
With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.
In the June Newsletter, I provide a market update and a PDF guide with tips to help you handle inflation. I also shared a CNN article where I shared my thoughts on Crypto and NFTs, 5 savings mistakes people make when building their financial life. If you find any of this information helpful, feel free to sign up to receive future e-mail updates. If you find any of this information helpful, feel free to sign up to receive future newsletters via e-mail.
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