By: Trent Middendorf, Middendorf Insurance Associates, President
In one sense, it’s funny that I’m writing an article on cyber coverage. From a professional development perspective, I’ve always enjoyed learning about coverage innovations from the insurance industry. Long considered as slow moving an industry as there is. I still work with local companies on coverage enhancements that are fair to both the client, and the insurance company. From a personal perspective, I like to say I blend the old way of doing things with the new way. I don’t need the latest and greatest technology, but I also like the conveniences those features provide. I’m between a millennial and Gen X-er with a touch of boomer in me.
I recently bought a new washer and dryer, exciting I know. I was walking around looking at all the appliances and they all said “smart” or “wi-fi enabled.” I can control my smoker through my wi-fi network from my phone, I love it by the way. However, it brings to mind a question. What exposure do I now have as a home network? If someone hacks my home, what information will they have access to and what can they do?
For years we’ve suggested cyber coverage to all our business clients. I saw it as a necessity. If you own a business, you need to protect your information and how it’s used. What started with businesses moved over to the personal insurance world via home, auto, or umbrella policies. Now almost every policy we write includes some sort of cyber coverage. I’ll try to keep the insurance nerd-talk to a minimum and still explain the ins-and-outs of cyber insurance for you personally.
The first thing to understand is what the insurance company calls their endorsement. What they name it may not be obvious as to what is actually covered. One company I work with calls their endorsement, appropriately, “cyber protection.” While another company calls it “identity protection.” When you are looking at your policy, you may have to read through it a little to decipher what the coverage is, another good option is to call your agent and ask them for help. Regardless, below are coverage examples that may be included in this type of endorsement. Not all “cyber” policies are the same, so I’ve tried to discuss the most common and pertinent coverage examples.
Cyber-Bullying - In the world of online social interactions, one of the major exposures you have is your online reputation. The cyber policy will help protect you and your family, any resident relative, from cyber-bullying or a social media compromise.
The insurance company will give you the resources and assistance to deal with online harassment that results in wrongful termination, wrongful discipline from school, or debilitating emotional impact. As part of the coverage for this type of event, the company will give you the support needed to restore your family’s reputation on social media networks. They have experts in public relations and social media, so you are not taking on this challenge alone. They’ll talk with you and tell you what they are doing and how they are going to combat online harassment. You can rest a little easier knowing you have support and people trying to help you.
Lastly, the emotional impact of cyber-bullying. This may be the biggest loss of all. While there is no money or property loss on this type of claim, the emotional impact is huge. The company will help you find a counselor or other resources for you, or your family member, to deal with the emotional stress of cyber-bullying. In the end, you know people out there who want to help you and are working on your behalf.
Phishing or breach of privacy – This is the unauthorized access to your personal data from a cyberattack. This, I believe, is the biggest exposure resulting from everything in our homes being “smart.” Think for a moment about how many devices, electronics, and appliances you have that are connected to your home network: washer, dryer, refrigerator, oven, microwave, dishwasher, tv, video game console, tablet, home computer, back to my smoker. Those are all entry points for someone to try to access your home network. Now going back to my opening paragraph, I’m not sure how much damage someone could do by hacking my smoker, but I also assume they can do more than I think.
The bottom line is the insurance company will help you before and after a phishing or breach of privacy attempt. No insurance company wants claims, we all know that. What’s great about the cyber world, is a lot of the companies will give you resources to secure your home network. If you have the coverage, you can contact the insurance company and they help you with system protection and guidance. In the business insurance world, we call this “risk management.” It is not a service many companies offer for home, auto, and umbrella policies. However, it is offered for cyber protection. There may be a charge for this service depending on the extent of the evaluation and what the insurance company provides. They want your network to be secure and will help you make it so.
However, say it does happen, and your information gets accessed. You will have people working for you. The companies will help you respond swiftly, confidently and correctly. They will help you detect the breach but also with recovery. You’ll be able to know why it happened and how to prevent it from happening again. Help would also be provided in re-establishing passwords, usernames, and other sensitive data.
Cyber financial loss – This is protection against loss of account funds from a cyber attack and related expenses. One thing to remember with this type of claim, your bank and/or credit card company may have coverage for you as well. The coverage from the insurance company’s perspective is coverage for expenses you incur in dealing with the loss of funds. This also encompasses coverage for the fraudulent creation of new credit accounts. It all depends on how the hack happened. The insurance company can help you deal with the banks and credit card companies.
All of this coverage sounds great, right? What does it cost? While I’m not going to give a specific price, because it varies greatly by company, it’s more affordable than you think. I’m also hoping you already have the coverage.
There is more coverage included in these endorsements than discussed in this article. If you are a victim of a cyber attack, I would encourage you to talk to your agent, or your insurance company and see if there is coverage. Almost every insurance company has some sort of marketing brochure that discusses their “cyber” coverage. I would recommend this as a good starting point to understand what coverage your insurance company provides.
There are also stand-alone cyber policies you can purchase that would provide the broadest coverage. Those policies can include coverage for document recovery, lawsuit protection, cyber extortion, and provide higher limits of coverage.
At the end of the day, it’s about helping you and giving you resources. In your chosen profession, you know the mistakes and pitfalls that cause problems. Unless you are in the cyber world, you may not know how to respond to an attack or who to ask. We’ve all had an auto accident and know the basics of what to do afterwards. These cyber-attacks are becoming more common and knowing how to respond is important. As I’ve said multiple times, the companies have the resources and expertise to help you navigate the aftermath of these attacks. They even provide support beforehand hoping they never happen.
That is why these endorsements and policies are valuable. The coverage is important. The help and resources in dealing with the aftermath is vital.