Cyberattacks are big news these days, and family businesses, family offices and family foundations are increasingly popular targets.
As the number of successful attacks (and the resulting remediation costs) continues to rise, organizations are assessing their vulnerabilities and looking for additional help in their risk management efforts. Businesses, family offices and foundations should be aware that they can insure themselves against cyber risk, just like they do for many other risks.
Types of Cybersecurity Insurance Coverage
There is no one-size-fits-all cybersecurity insurance policy, but policy options are available to cover the expenses or financial losses that your business, office or foundation would incur in the event of a successful system breach or ransomware attack. Those families whose businesses, family office and/or foundation are interconnected (either through systems, software or shared employees), have additional exposure to cybersecurity risk that can be insured in order to protect the family. Cybersecurity policies can contain both first-party insurance (insurance protecting against costs and expenses incurred in connection with a cybersecurity issue) and third-party liability insurance (defending and indemnifying claims by others that they have been harmed by a breach of your cybersecurity).
Cyber insurance coverage needs would depend on your situation and would need to consider that the insurance market in this space is constantly changing, but options may exist to cover:
1. Privacy – This covers costs related to investigation and mitigation of issues related to cybercrimes such as identity theft, and theft or exposure of customer, employee or family data, such as personally identifiable information (PII). This type of insurance could help pay for:
2. Business Interruption and Ransomware – This coverage could help pay for:
3. Digital or Payment Fraud – This coverage can provide reimbursement when someone is able to:
4. Systems/Network Security – This covers your organization in the event of a network or system security failure, such as a data breach or a malware infection. This type of coverage can reimburse you for costs related to:
5. Errors and Omissions – Typically used by professionals, such as attorneys, to cover themselves in the event an error is made while providing services, this coverage could protect you in the event that a cyber incident interferes with your professional services to customers.
6. Cyberbullying – This is a newer add-on to cyber insurance, but one that families are interested in. This can cover costs when harassment in the online space leads to mental or physical health problems, legal issues or even a need to relocate. Chubb was a pioneer for this insurance in 2016 and according to the description on their website and an expanded product description in an article by Ashley Abramson in Money magazine, cyberbullying insurance can reimburse families for costs such as:
Consider Your Cyber Insurance Needs
We all hope that our current cybersecurity training and procedures will be enough to protect our information and our systems from intruders. Realistically, however, as the sophistication and personalization of these attacks continues to increase, we can expect more data breach and ransomware attacks to be successful.
If your family business, office or foundation is exploring the need for cyber insurance, contact Warner Partner Jason Byrne at email@example.com or at 616.752.2263 to evaluate options for your situation. We can help you make sure that your insurance choices will cover the areas where you will spend money in the event of a breach and also work with the providers you will use in response to a cybersecurity event.
Wondering what else you can do to prepare for a cybersecurity incident? See our earlier blog post: Is Your Family Office Ready for a Cyber Incident?