New Perils in a Connected World – Ignorance is not Bliss

Ignorance is NOT Bliss!  By Stew Nelson

I can’t believe how many businesses that I speak with that when questioned about their exposure to a data breach, believe that that they have no risk at all!  Perhaps the problem is the insurance industry’s practice of selling policies with “holes” in them.  The carriers refer to the “holes” as Exclusions and then they stick them at the end of a policy that no one reads any way.

So, if you are not going to read your policy, I will read some “fine print” for you.  This was found on page 65 of 212 pulled from a random policy I selected from my files.  Under Property Not Covered -Electronic data,  “Electronic data means information, facts or computer programs, stored as or on, created or used on, or transmitted to or from computer software (including systems and application software), on hard or floppy disks, CD-ROMS, tapes, drives, cells, data processing devices or any other repositories of computer software which are used with electronically controlled equipment.”  Wow!  I have to grade the author down because it is a run-on sentence but I have to give them credit as I cannot think of any way possible that you could get coverage for intangible property i.e. bits and bytes, from this policy!

Now let’s jump to the Liability Section of the policy.  Under Perils Excluded, Computer Virus or Computer Hacking – “We do not pay for: 1. any direct or indirect loss or damage or, 2. loss of access, loss of use, or loss of functionality caused by a `computer virus` or by `computer hacking`”.  There are other Exclusions in the Personal and Advertising Injury Section but I think you get the idea – No coverage for bits and bytes.

So I am going to repeat myself one more time – If your business uses computers that are attached to the internet for email or a web site, you need a Cyber Liability policy that will cover damage to yours or others intangible property.   Do me a favor and call your local insurance professional right now and have a frank conversation of the financial risk you are unnecessarily assuming if you don’t have a Cyber Liability policy for your business.  The business that owns the policy I just read to you from does.  It cost all of $990 for $1M worth of coverage.