Written on behalf of Brian S. Kabateck
August 25, 2017
Cyberattacks that result in massive data breaches are becoming more frequent and costly for companies and consumers. HBO and its investors are reeling from a hacking scandal that compromised 1.5 terabytes of data, which dwarfs the amount of data exposed in the 2014 Sony cyberattack. The WannaCry attack in May 2017 raced around the globe in just a few days, attacking 150 countries, and creating an estimated $4 billion in losses.
According to risk management experts there have been more than 2,200 publicly disclosed compromise events since the beginning of the year, exposing billions of records containing sensitive personal information. In light of these vulnerabilities, companies and consumers are increasingly seeking insurance policies that offer some financial protection when valuable information is stolen.
In a world connected by computers, cell phones and networked devices, financial institutions, healthcare organizations and government databases are extremely vulnerable if they don’t have secure online technology. As hackers become more sophisticated, consumers are understandably concerned about the safety of their private information, but don’t have a clear grasp of the risks they face when their data is exposed or stolen.
A cyber liability insurance policy is basically a contract agreement between a buyer and a seller that allows the buyer to offset the costs associated with a security breach. While these policies have been around for more than a decade, there’s still a lot of confusion surrounding these cyber policies, which can be complicated and require some negotiation. Insurance can offer some peace of mind, but cyber liability insurance coverage (CLIC) is not necessarily suited for everyone.
CLIC normally covers expenses related to the insured and claims by a third party, which can include reimbursements for the cost of forensic investigation, business damage due to data loss recovery and network downtime, privacy and notification issues and legal expenses. For consumers, this type of insurance is a risk management and wealth preservation tool, so it may not make sense to purchase insurance if the cost of the premium outweighs the expected losses.
There are a number of home cyber protection policies on the market that offer coverage and services for computer attacks, cyber extortion, online fraud and the breach of personal information involving smart phones, computers and connected home devices. The question that consumers must ask before purchasing a policy is how much do I have to lose?
For high-income earners with several million dollars in liquid assets, it’s likely worth the cost of the premium. If you handle valuable financial data or intellectual property, such as a CEO of a company or the owner of a startup with sensitive information on a home computer, that would make you a strong target of an attack. Even if you have less money than a millionaire, a financial loss can be extremely painful and financially devastating and you may want to consider getting your money protected by the Federal Deposit Insurance Corp., which safeguards deposits in checking, savings and money-market accounts.
It’s important you document your best practices for risk reduction when you file a claim with the insurance company. You’ll need to show reasonable measures were implemented to protect the data, otherwise you may not get reimbursed.
There are laws in place to protect consumers in the wake of a data breach due to a cyberattack. The California Security Breach Information Act (SB-1386) ensures that consumers are notified when their personal identifiable information such as a social security number, driver’s license or credit card number has been compromised. California S.B. 1386 was passed by the legislature that amended civil codes 1798.29, 1798.82 and 1798.84 which regulates the privacy of personal information.
Consumer protection laws are designed to ensure the rights of vulnerable consumers in society. The laws are a form of government directive intended to protect the rights of consumers.
If you believe you and many others like you have been somehow injured, cheated, or otherwise harmed by unfair business practices, give us a call and let us help you protect your rights. At Kabateck LLP, we can help you explore all of your options and ultimately achieve for you the maximum compensation for your harm.