Does Your Firm Need Cyber Insurance?

For law firms, protecting the confidential data of clients CYBER ATTACK. Word cloud concept illustration.any unintended leak of information related to intellectual property or a prominent legal case can be disastrous.

Many lawyers are often asked to safeguard sensitive information, but their ability to do so can be undermined by weak cyber security and determined hackers. If firm’s security is breached, cyber insurance may help protect against subsequent losses.

Key Marsh 2014 Cyber Survey Findings:

  • 79% of respondents in aggregate viewed cyber/privacy security as one of their top 10 risks in their overall risk strategy.
  • 72% said their firm has not assessed and scaled the cost of a data breach based on the information it retains.
  • 51% said that their law firms either have not taken measures to insure their cyber risk (41%) or do not know (10%) if their firm has taken measures.
  • 62% have not calculated the effective revenue lost or extra expenses incurred following a cyber-attack.

cyber liability coverageYou must remember that even small law firms are being attacked by hackers, who seek to overcome protections placed on email, smart phones, and firm’s networks. A data breach can lead to serious losses and liabilities.

Note: The cost of a cyber attack can be substantial. The average annual cost of a cyber crime incident in 2012 was $8.9 million, according to the Ponemon Institute’s 2012 Cost of Cyber Crime report.

A cyber insurance policy should be tailored to meet the holder’s specific needs and supplement any gaps in their existing insurance coverage. Policies may include coverage for liability relating to security breaches, the costs associated with a breach, such as support and monitoring services, expenses stemming from business interruption, reputational damage or regulatory compliance.cyber-insurance-cover-370x229

Some law firms may believe that they are protected under general and professional liability insurance policies, but nowadays relying on traditional insurance to protect against cyber events is wishful thinking. The details of a cyber insurance policy, like any insurance, should be examined carefully. Some policies will limit coverage when the policy holder has allegedly been negligent.

Today, law firms face a barrage of cyber threats. Some may have already been hacked to some degree, without knowing it. Law firms are not required to disclose a hacking incident unlike many other organizations and consumer-oriented companies, which makes analyzing law firms’ cyber security a challenging task!

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