What Crime Insurance Covers—and Doesn’t—In the Cybercrime Era

What Crime Insurance Covers—and Doesn’t—In the Cybercrime Era

 In Crime Insurance
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Protecting ourselves online has become an unfortunate challenge in the cybercrime era. As the problem persists, over one-third of Americans report being victims of digital financial fraud. That surfaces the need for businesses to elevate their internal computer fraud policies and cybercrime insurance to address high-risk coverage gaps.

THE CURRENT RISKS FOR SMALL BUSINESSES

Small-to-mid-sized businesses are often more exposed to specific cybersecurity issues because they lack the infrastructure of larger corporations. As a result, almost half of all online attacks affect companies with under 1,000 employees.

Those attacks happen under various circumstances, from malware installed on an employee’s computer to a coworker falling for a phishing scam and other common cybercrimes like compromised passwords. Consequently, cybersecurity analysts estimate that businesses of this size pay between $25,000 and $3,000,000 to resolve digital crimes.

In many circumstances, recovering financially from a cybercrime often involves what you include in your business insurance portfolio, including cyber liability coverage and commercial crime insurance. 

On average, small businesses pay between $25,000 and $3,000,000 to resolve digital crimes.

CYBER LIABILITY VS. COMMERCIAL CRIME INSURANCE

These insurance products are often discussed in similar contexts, but each one addresses specific risks and fills different gaps in coverage. Let’s begin by explaining commercial crime insurance.

WHAT IS COMMERCIAL CRIME INSURANCE?

Commercial crime insurance may reimburse your business for losses from external and internal crimes. More specifically, this insurance provides potential repayments for crimes committed by an employee or a third-party contractor in broader terms.

WHAT DOES COMMERCIAL CRIME INSURANCE COVER?

While commercial crime insurance may cover certain types of cybercrime, it often falls short in covering critical risks like data breaches and social engineering attacks. In this case, the coverage under a crime policy includes:

  • Burglary or robbery
  • Computer fraud
  • Counterfeit paper currency
  • Employee dishonesty
  • Forgery or alteration
  • Fraudulent money orders
  • Funds transfer fraud
  • Theft of money and securities

WHAT IS CYBER LIABILITY INSURANCE?

Cyber liability insurance focuses explicitly on digital crimes and data breaches. Here, the benefits are designed to mitigate cybercrime’s losses and financial consequences by helping your company navigate the legal and notification processes after a cybercrime occurs.

Cyber liability insurance focuses explicitly on digital crimes and data breaches.

WHAT DOES CYBER LIABILITY INSURANCE COVER?

At its core, cyber liability insurance may provide a business with financial support in the event of a computer crime, such as:

  • Sending phishing emails to access passwords or private information.
  • Installing malware and ransomware on company computers.
  • Website spoofing that steals customer information or money. 
  • Data breaches that leak customer and company information. 
  • Financial crimes and theft of securities. 
  • And other methods that exploit vulnerabilities in digital systems and corporate networks.

Depending on the policy, a business can recoup all or some of the losses associated with the circumstances above. Under those scenarios, cyber liability insurance generally provides benefit payments for the following:

  • Defense costs
  • Judgments
  • Notifications and credit monitoring expenses
  • And potentially other regulatory fines associated with a cybercrime

WHAT DOES CYBER LIABILITY INSURANCE NOT COVER?

It’s important to remember that every insurance product provides an individualized solution. Here’s what’s often not covered by a cyber liability insurance claim:

  • Physical damage: Physical damage to hardware or equipment caused by a cyber event.
  • Loss of intellectual property value: Loss of intellectual property, like trade secrets, is typically outside coverage.
  • Reputational harm: Damages related to brand or reputation.
  • Pre-existing security flaws: Incidents due to known cyber vulnerabilities that the business didn’t address.
  • Third-party cyber attacks: Compromised vendor systems resulting in stolen business data. 

FORTIFY YOUR BUSINESS INSURANCE WITH CYBERCRIME COVERAGE

Closing coverage gaps is paramount to protecting your business in the cybercrime era. That starts with ensuring your business benefits portfolio includes affordable solutions like cyber liability and commercial crime insurance.

Contact us to learn more about our services or to discover the benefits of partnering with a trusted insurance team that could result in lower rates. 

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