Why is it Important For Technology Companies to Have Cyber Insurance?
Technology companies face many unique risks which are not present in more traditional industries. Some examples of these risks include data security and privacy breaches, business interruption, IT resilience issues, and unauthorized use of intellectual property. As a business owner, while you will never eliminate all your risk, with the appropriate insurance policy you will be able to mitigate the vast majority of your exposure. Unfortunately, standard commercial general liability insurance policies will not protect you against some of the biggest risks your business is facing, which is why every technology company business owner should consider cyber insurance.
Cyber insurance is a type of liability insurance that can protect technology companies from risks which are normally not covered under a standard commercial general liability policy. If filling this coverage gap wasn't reason enough to motivate you, prospective customers will often require that technology companies carry a minimum limit of cyber insurance. These are often required within standard contractual agreements, and if you aren't compliant, you may be at risk of defaulting on your professional obligations and open your business up to additional liability. You may think these requirements aren't necessary, but this is because technology companies are often entrusted with large amount of sensitive data, and have access to third-party information.
Privacy and security breaches are becoming increasingly common, and can be very costly to address. If a technology company suffers a data breach, cyber insurance can help to pay for the costs of notification, credit monitoring, and identity theft resolution services for affected individuals. In addition, if the technology company is sued as a result of the data breach, the insurance policy can help to pay for the costs of defending the lawsuit, as well as any damages that may be awarded.
IT downtime can be very costly for technology companies, as it can result in lost productivity, missed deadlines, and frustrated customers. If a technology company's IT systems go down, cyber liability insurance can help to pay for the costs of bringing in outside consultants to help get the systems up and running again, as well as any lost business income that may be incurred as a result of the downtime.
Unauthorized use of intellectual property can also be a big issue for technology companies. If another company or individual uses the technology company's intellectual property without permission, the technology company may be able to file a lawsuit for infringement.
Here are a few specific claims examples that illustrate why this type of insurance is so important for technology companies:
-A technology company was sued for $1.2 million after one of its employees accidentally uploaded sensitive client data to a public server.
-A technology company was sued for $800,000 after a power outage caused one of its client's websites to go offline for several hours.
-A technology company was sued for $2.3 million after a hacker was able to gain access to its client's confidential database.
Without this type of protection, technology companies could be left footing the bill for these types of claims, which could be very costly. So, if you're a technology company, make sure you have the right cyber insurance in place to help protect your business from potential risks. The first step to making sure you have the right type of cyber insurance is reaching out to a specialized insurance broker who understands the risks you face. If you have any questions on the risks your technology company faces, and aren't sure if your current insurance policy would protect you in the event of a claim, we are happy to help.
