Ok, I have been asked to write about 800 words about cyber liability and identity theft. This is my 32nd year in the insurance business. When you think about it, insurance is an easy concept. If you have risk, identify the risk and then make decisions on how to eliminate the risk or decrease its significance. Most of those risks are easy to handle because they involve either avoiding the risk or transferring it to a third party. If you own a car, the law says you have to have insurance, so you go purchase auto insurance as it may not be practical to eliminate driving altogether. If you own a home, that is a big investment and purchasing homeowners insurance is a cost effective way to transfer the risk away from you and gain the peace of mind for protection of such a large investment that could ruin your financial security.
There you have it, 32 years of insurance experience, you either avoid risk or transfer it, for a price, to another entity for your security. Of course there are other fancy options that organizations either promote, utilize or otherwise sell. In actuality, many individuals go their entire driving careers without an accident or a homeowners claim. Here is my profound statement: in your lifetime, you will not avoid an attempt to steal your identity, or in case of a business, an effort to infiltrate (hack) your computer records. There is no way to avoid it. It will happen to you.
Case in point one, an employee of our organization had her social security number stolen and it was being utilized by a third party in Texas. This third party was working as an independent contractor and not paying his taxes. The income was reported to the IRS and at age 24, our employee was given a bill for over $9,000 for taxes owed. The stress of handling the payment, re-establishing her credit status, paying an attorney to negotiate the IRS Payment and time out of the office was immense for this young lady.
Case in point two, recently a small restaurant here on the Western Slope had their POS (point of sale) vendor program breached during a busy lunch hour by a group, later tracked to Russia, that cost the restaurant over $22,000 in cleanup costs.
Case in point three, a local client had eight bank accounts accessed via his personal computer. There was no breach of the bank’s system. The hackers copied the password of the personal computer and over a weekend transferred over $100,000 to four banks in three different states. While there was protection due to wire transfers having a 24 hour waiting period before money can be withdrawn, one of the banks in Chicago allowed a withdrawal during that time and some of the money was lost. (By the way, the government has presented legislation allowing immediate access to wire transfer funds in 2016…)
Here are some of the options and definitions that you can investigate:
- Endorsements on you Homeowners Insurance Policy
- Identity Theft Protection Services
- Separate Cyber Liability Policies
- Data Breach Policy Enhancements
Here is what they can provide:
No one can define this better than the FTC; “Identity theft protection services can help you monitor your accounts. They can place fraud alerts or freezes on your credit reports or remove your name from marketing mailing lists. Many people find it valuable and convenient to pay a company to keep track of their financial accounts, credit reports, and personal information.” ID theft protection services can range anywhere from $9 to $30 per month and there are LOTs of companies out there. One thing that our organization insists upon is choosing a company that does “complete identity restoration” so you aren’t left with an 800 number and have to do all the work by yourself.
For businesses with a cyber risk, as in EVERY business, insurance carriers we work with are coming out with lots of options for protection. One of the carriers we use has a data breach enhancement program that covers the expenses of notification, forensic analysis, credit monitoring, legal services, data breach ransom, and public relations costs for keeping up your reputation. Post-data breach recovery efforts are not cheap and for a small, medium or large business, having coverage could keep you from shutting your doors. This specific carrier that we use regularly also provides cyber business interruption and extra expenses coverage so you can continue to operate through the storm.
As to not confuse you with insurance lingo, meeting with one of our risk experts is what we highly recommend. Cyber and identity thefts are NOT what happen to others. It is not something in the newest sci-fi novel or futuristic film; it is here in your life in Western Colorado. You cannot avoid it, it will happen to you. Investigate and transfer the risk.