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What Your Business’s Technology Says about its Insurance Needs

October 3, 2012

It’s a fascinating time to be a small business owner. Technological solutions like online sales platforms and mobile apps allow you to sell to a wider range of customers. Clients with “user accounts” may be able to log into your website, adjust profile settings and make requests, helping you deliver better service. Smart phones allow your employees to stay connected and profitable wherever they go. Each new tool can empower your business, but some of these technologies can expose you and your assets to emerging risks in the realm of “cyber liability.” 

Did you know that, as a business owner, you’re responsible for protecting your clients’ personal information? This simple requirement can prove surprisingly complex when you begin to invest in new technology and greater web connectivity for your business. The FTC estimates that as many as 9 million Americans have their identities stolen each year, while the worldwide cost of cybercrime is estimated to be $388 billion annually. [1] Due in part to the proliferation of smart phones and portable tablets, the TSA has had to lease a new warehouse just to store devices misplaced and left behind at airports. [2] Such breaches of privacy are on the rise while most state and industry regulations protecting consumer information are becoming more stringent. [3] So you should be asking yourself: “What does the technology my business is using tell me about my insurance needs, and what can I do to protect myself against consumer privacy claims?”

Any business with an internet facing network or database containing clients’ private information should be considered “at risk” for cyber liability threats. However, some signs that your business may be particularly vulnerable include: 

  • Using a website, app, or other online platform to make sales and collect payment information.

  • Having a website with a “sign in” feature that allows clients to set up accounts containing sensitive personal data.

  • Providing healthcare or financial services (these industries are regulated more heavily because of the types of client records involved).

  • Allowing employees to use smart phones to manage email or log into servers storing client information.

If your business matches any of these criteria, there are a couple things you can do to make sure you’re protected. First, consider purchasing cyber liability insurance. A cyber liability policy can protect your business from costs associated with a breach of customer privacy, including the costs of recovering digital assets, notifying clients of a breach, providing credit monitoring to injured parties, and paying regulatory fines and penalties.

Second, even with the added protection of insurance, your business should have clear plans for protecting client information and dealing with possible leaks. Many state and federal regulations require businesses to outline steps they plan on taking to protect consumer data. Don’t stop at simply thinking about and describing how such data should be stored. Ask yourself: “What would I do if my website was hacked? What steps should my employees take if they misplace a smart phone or thumb drive with sensitive information?” Having quick responses mapped out for contingencies like these can often prevent small problems from developing into big, expensive problems that stand to threaten your business’s public image.

For more information on the perils of cyber liability and other insurance related problems subscribe to the Avanti Reader via RSS or connect with us on Twitter (@AvantiIsurance) or Facebook to receive notification of our latest posts. As always, Thanks for reading.


1. See Elise Ackerman, Secretary of Homeland Security: cybercrime as big a threat as Al Qaeda, Forbes QUBITs Blog (June 3, 2012).

2. See Phil Gusman, As Mobile Devices Catch on with Businesses, Data Breach Risk Grows, Property/Casualty 360° Blog (September 18, 2012)

3. See Governo and Dennis, Staying Compliant Amid Escalating Cyber Threats, Property/Casualty 360° Blog (September 17, 2012)

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