Less Money, More Problems.

May 29, 2019 | by

Recently I was asked, “What is one of the most common coverage concerns I identify with clients outside of their industry specific needs?” My mind instantly went to cyber crime and data compromise liability and I’ll tell you why…

Stuck in the past?

Business insurance as we know it today had its beginnings in London in the late 1600s. It was originally intended to protect merchants from shipping losses. Edward Lloyd opened a coffee house which would eventually become the groundwork for ‘Lloyds of London’. We’ve come a long way with insuring business in the last 300+ years but especially long running, generational businesses that need to make sure they aren’t living in the past.

21st Century Problems

I feel grateful to have grown up in a generation where I’ve lived my life on both sides of the technological divide. I remember what it was like to live before mobile phones, high speed internet, and *gasp* SOCIAL MEDIA! In my lifetime I’ve gone from rotary phones to wireless everything. From a tube television with a channel dial instead of a remote to a Super HD TV I can talk to. From heavy bound paper encyclopedias to the world wide web in the palm of my hand. The advances to our personal technology, especially within the last decade is staggering. The changes to the environment in which we run our businesses is no different.

Cash is King?

Hardly, I know very few businesses – who can afford to operate in a cash only environment. I was in line at the grocery store the other day and the person in front of me in line swiped a card for a pack of gum (I’ve done it too, guilty as charged – pun intended). People are carrying less cash than ever before. But, while it solves a lot of stress involving cash handling and employee dishonesty it unwittingly puts businesses in a precarious position.

Electronic transactional and personal data flowing through businesses is at serious risk. An article from Zywave stated cyber crime is on the rise and statistically 1 in 3 small businesses will have a data breach event. The smaller you are, the less likely your business is to have security in place to prevent a breach – don’t think hackers haven’t thought of this. I once had my personal credit card skimmed and they traced the breach back to a gas pump in rural Kentucky. No size business or location is immune to these risks.

Passing the Figurative Buck

“Surely, my third-party credit card processing company is responsible for a breach like that?” Oh man, how many times have I heard that?! Even if they are found to be ultimately responsible for the leak, your business is going to be pulled into the lawsuit. The fine print in that user agreement you quickly scrolled through and didn’t read before you clicked ‘I agree’? It may even make you PRIMARILY responsible.

Also according to federal regulations, businesses are obligated to report their data breaches to any customers who could potentially be affected and offer preventative credit monitoring. If the breach effects enough clients, it must be reported to the federal government directly. This can add up to big bucks for a small business and a huge blow to a business’s reputation in the community after a data breach event. 

Make sure your business coverage isn’t stuck in the past. I love listening to 80’s pop music, but I certainly don’t want the same vibes from my insurance coverage in 2019.  If you haven’t talked to your insurance professional about updating your protection there is no time like the present. Let’s live in it AND insure in it. You can call me at 608.827.4525 or email me at Lydia.powell@avidrisk.com

 

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