What happens to your business in the aftermath of a disaster? That depends, in part, of the definition of disaster.
Most businesses are familiar with Business Interruption/Income Insurance. The first Business Interruption policy was issued by London Underwriters in 1939 and is designed to put the insured company back into the same financial position that which it would have enjoyed had the disaster not occurred. However, according to the American Insurance Association , the coverage is only triggered in three limited circumstances:
- There is physical damage to the premises of such magnitude that the business must suspend its operations
- There is physical damage to other property caused by a loss that would be covered under the company’s insurance policy, and that damage totally or partially prevents customers or employees from gaining access to the business
- The government shuts down an area due to property damage caused by a peril covered by the company’s insurance policy that prevents customers or employees from gaining access to the premises
So what happens in the event of a cyber attack? Unfortunately, a Network attack is not considered a disaster and is not covered by the standard Business Interruption/Income insurance policy.
What constitutes a network attack? Consider the following:
- The intentional and unauthorized gaining of access to or use of the insured’s network (computer hardware, software, firmware, electronic data stored on or within the network, connected by two or more computers including networks accessible through the internet, intranet, extranets, virtual private networks)
- Receipt of targeted malicious code from an external source
- A targeted denial of service attack
According to a report recently released by EMC Corporation for its Global Data Protection Index 2016, the average cost of a data loss and disruption is $913,958 per organization. In addition, the average costs of unplanned system downtime is $550,000 and the average length of downtime is 22 hours. Over 70% of study participants responded that they did not think that their organization would be able to fully recover their system or data.
How do you recoup data forensic expenses, costs to restore or replace digital assets, extra expenses, and the reduction in business income? Fortunately, insurance coverage can be obtained through a Cyber Insurance Policy. Unfortunately, coverage is not offered by all carriers, is frequently overlooked and not understood. This creates a significant risk to any business operations.
References:
American Insurance Association
EMC Corporation, Global Protection Index 2016
Allied World Insurance policy forms SRVS2 00002 and SRVS2 00052 00
