Who Is Responsible When Retailers Are Hacked?

cyberFollowing the recent news reports involving shoppers at Target, Neiman Marcus and other large retail stores, this past holiday season, once again Cyber Liability and the urgent need to protect yourself against hackers has become the new darling of the media.

All industries such as E-Commerce to Retail Stores, Online Websites, Professional Services, Medical Offices, Online Publishing, Schools, Colleges, Cities, States, Municipalities, Not-For-Profits, Contractors, Motor Vehicle Departments, to name a few, as well as anyone who takes payment over the internet and/or has confidential information on their sites should have the protection of a Cyber Liability policy.

Some coverages provided by a Cyber Liability Policy are:
• Privacy Liability
• Network Security Liability
• Media Content Liability
• Reputational Damage
• Notification Expenses
• Crisis Management including Public Relations
• E-Business Interruption and Cyber Extortion.

Additional coverage for Credit Monitoring, Data Restoration, and Privacy Regulation Fines may also be added. Even such fines as those imposed by US federal state and local statute including any breach of regulations governing the control and use of Private Information including HIPAA (Health Insurance and Accountability Act of 1996), Gramm-Leach-Bliley of 1999, state laws such as California Database Protection Act of 2003 and the federal and state consumer credit reporting laws such as the Federal Fair Credit Reporting Act can be added.

We all know that technology is here to stay and that it is just a fact of life and a component of our society. It is up to us to protect ourselves and our customers from having their business or personal information stolen and misused if we want to be able to do business in the world as it is today.

According to a recent article in Business Insurance (January 19, 2014) on the Target Corporation security breach fiasco, it was indicated that Target actually had a Cyber Liability policy with a $100 million limit at the time the breach was discovered. Of course, such a limit of insurance won’t even begin to cover their liabilities in this matter. However, it is a start and a good one at that. At least they were savvy enough to understand their powerlessness in the face of such an event taking place and they were proactive enough to take the necessary steps to minimize the actual loss, and respect the insurer’s capabilities, when it came to loss control and needed assistance after the breach took place.

Clearly, Cyber losses can be costly to your business as well as your reputation so if you think you need the coverage, you probably do. Even if you are not sure, there is no harm in asking. If you want to know more about how to protect your business and your customers, we strongly urge you to consult with your insurance agent about the type of policy that would best fit your needs.

By Karen Skoler, CPCU

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