Cyber Insurance for Businesses

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Why your business needs cyber insurance

Businesses of all sizes are vulnerable to cyber losses from some form of information technology failure, whether by malfunction, human error or breach – often with catastrophic results.

View Personal Cyber Insurance

An unauthorized intrusion could rob your business of assets, damage its reputation and prevent it from operating. And while attacks on large corporations gain most media coverage of cyber risk, small and medium-sized businesses are more vulnerable, with fewer resources to prevent and recover from security failures.

Because traditional property, personal and general liability policies don’t cover many of the losses caused by cyber exposures, insurance companies have developed new products to address businesses’ increased risk. As an independent agency, Sylvia Group can work with multiple carriers to design the coverage program that best serves your business’ needs.

First-Party Coverage

A first-party cyber insurance policy is designed for non-tech companies, providing protection against data loss, theft and other common exposures.

Our first-party policies provide coverage in the following areas of risk:

Reimbursement for loss resulting from damage to or corruption of the insured’s electronic data and computer programs.
Reimbursement for cost of customer notification, regulatory fines and penalties, and public relations expenses.
Reimbursement for income loss, interruption and special expenses directly as a result of an interruption or failure of the insured’s computer system caused by an act of terrorism.
Income reimbursement for expenses incurred during the period of restoration of the insured’s computer system or website.
Reimbursement for extortion expenses resulting directly from a credible threat to the insured’s computer system.
Protection from e-theft exposures, such as:
  • Funds Transfer Fraud: wrongful transfer of funds by a third party from the insured’s account at a financial institution.
  • Computer Fraud: use of a computer to fraudulently transfer insured property from inside the insured premises or bank to a person or place outside the insured or bank’s premises.
  • Social Engineering Fraud: use of human interaction to influence someone into acting inappropriately, often by breaking normal security procedures.

Third-Party Coverage

A third-party cyber insurance policy helps tech companies and independent contractors protect their systems against cyber attacks and data breaches.

Our third-party policies provide coverage in the following areas of risk:

Includes claims arising from unauthorized access to or dissemination of private information, including credit card numbers.
Legal liability for a security breach or privacy breach of employees’ personally identifiable information or protected health information.
Legal liability for a security or privacy breach resulting from alleged violations of HIPAA and other privacy protection laws or regulations (state, federal or foreign).
Claims arising from the following on the insured’s internet or intranet site:
  • defamation, libel or slander.
  • invasion of an individual’s right of privacy.
  • plagiarism or misappropriation of ideas under an implied contract.
  • infringement of any copyright, trademark, title or service mark.

Claim Scenarios

Here are some actual and potential claims resulting from cyber risk exposures:

A regional retailer contracted with a third-party service provider. A burglar stole two laptops from the provider containing the data of more than 800,000 of the retailer’s clients. Under applicable notification laws, the retailer was required to notify affected individuals. Total expenses incurred for notification and crisis management to customers was nearly $5 million. (Source: Philadelphia Insurance Companies)
A computer worm directing infected computers to launch a denial of service attack against a regional computer consulting and application outsourcing firm caused an 18-hour shutdown of the entity’s computer systems. In addition to extensive costs and expenses for repairing and restoring its system, the firm incurred business interruption expenses totaling approximately $875,000. (Source: Philadelphia Insurance Companies)
An employee of a rehabilitation center improperly disposed of 4,000 client records in violation of the center’s privacy policy. The center settled the claim with the Commonwealth of Massachusetts, agreeing to pay fines and penalties. It also extended $890,000 in customer redress funds for credit monitoring on behalf of the victims. (Source: Philadelphia Insurance Companies)
An overseas vendor contracted by a U.S. IT company left universal administrator defaults installed on the company’s server and paid a “hacker for hire” $20,000 to exploit the vulnerability. The hacker threated to post the records of millions of registered users on a blog available for all to see. The extortion payment and additional expenses were expected to exceed $2 million. (Source: Philadelphia Insurance Companies)
An insured received an email that appeared to be from its bank but was not. The insured’s employee opened the email, which activated a Trojan horse computer virus that read key strokes from the employee’s computer. The perpetrator used this means to obtain banking and password information and initiate a fraudulent electronic wire transfer from the insured’s bank account. (Source: The Travelers Insurance Companies)
An organized crime ring gains unauthorized access to the insured’s accounts payable in its computer system and alters the bank routing information on outgoing payments. The result: $1 million transferred to the crime ring’s account. (Source: The Travelers Insurance Companies)
The controller for a distributor of component parts was responsible for making regular payments to overseas vendors. After months of working with a particular vendor and receiving regular shipments, the controller received an email that appeared to come from his vendor contact, indicating that the vendor’s bank was having issues with accepting payments and asking if the next payment could be made to a new bank. Verification was a challenge. After the supposed vendor applied some pressure, the controller paid the invoice via wire transfer. When the real vendor realized payment was overdue, the fraud was revealed. The fraudster absconded with the almost $250,000 payment. (Source: Chubb Insurance)
A restaurant‘s point-of-sale machines are illegally skimmed with a hidden electronic device for eight months, affecting 1,000 cards. Some cardholders become identity-theft victims and pay for their own credit monitoring. Others are unable to recover funds stolen from their bank accounts because too much time has passed before they discover the fraudulent activity. Victims unite and sue the restaurant for costs incurred. (Source: United States Liability Insurance Group [USLI])
An employee's company laptop is stolen from his home. The laptop contains private financial information of some of your customers, who sue you for damages resulting from your failure to protect their private financial information. (Source: The Travelers Insurance Companies)
An employee of a private high school mistakenly distributes via e-mail the names, social security numbers, birthdates, and medical information of students and faculty, creating a privacy breach. Overall, 1,250 individuals’ information is compromised. (Source: Philadelphia Insurance Companies)
You place advertisements on your website and in your direct mailings to announce a new service offered by one of your partners. The advertising contains material that your partner's competitor claims it owns. The competitor sues you, contending you are liable for damages caused by unauthorized use of the advertising material. (Source: Philadelphia Insurance Companies)

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