These mistakes have cost other companies millions
You feel good. As a business owner, you’ve got great employees, business is booming and you’ve invested in cyber liability insurance to cover your company in the event that something unexpected happens. But then something does happen and when you file your claim, your insurance provider gives you the shocking news: your claim in unequivocally denied. Before this happens to you, read on to learn about the mistakes that can cost you your claim and how to avoid them.
We’ve all heard about them and for most folks, a phishing scam seems like a faraway event that would never happen to them. But the truth is, these kind of scams go on all the time and can cost your business tons of money and the denial of an insurance claim. Here’s an example:
A recent phishing scam involved a request for company employees to transfer millions of dollars into an account that was supposedly held by a company executive. An email request was sent that appeared to come from the executive and the message even included the picture and signature of the executive. Everything looked legit, but it wasn’t.
What happened next?
The employees who responded to that scam did exactly as they were told, and to their knowledge, they were responding to a request from their boss. But in reality, it was a phishing scam that cost the company millions of dollars. But when the owners of the company filed a claim on their cyber liability policy, the unthinkable happened. Their claim was denied.
Why were they denied?
In the insurance company’s eyes, the employees of this company willingly gave away millions of dollars. It did not matter that they were duped. And even though the company investigated and came to the conclusion that the employees were not to blame, the insurance company concluded that they handed the money over voluntarily and so, even though they had cyber liability coverage, the losses were not covered.
How to avoid this kind of event
You have cyber liability insurance, but as the example above demonstrates, there are instances that can happen that may cause your claim to be denied. You can avoid this from happening by implementing a few important practices into your organization.
- Risk management: Implementing best practices that can avoid breaches in the first place. If you’re collecting personal data and credit card information from customers, be sure you encrypt the data and have security measures in place so the information is protected.
- Limit access: Ensure that only those employees who need to have access to the data are able to access it.
- Have a backup: Create a backup of all information that you store in a separate location so it can be accessed in the event of a loss or disaster. Many companies are now doing this through cloud service providers
Train employees on phishing schemes
Everyone thinks they can spot a scam when they see it, but because of today’s highly advanced technology, it is easy to fool even the swiftest eyes. Your best bet is to go over what these phishing emails look like and to implement a system of approval before any funds or information are transferred.
Prevent falling prey to phishing emails by:
- Training employees about proper procedures
- Implementing rules against giving out login information
- Informing employees that executives will not make requests via email for funds or company data
- Requiring authorization for any requests that involve company funds or privileged information
Getting hacked or scammed in your business is bad enough, but if you add to that the denial of coverage by your insurance company, it’s much worse. While your cyber liability policy will cover many things, it many not cover everything like phishing scams. If you’re not aware of what your policy covers or you haven’t trained your employees to be aware of possible scams, their innocent actions can cause substantial losses—and even get your claim denied.