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Is cybersecurity insurance worth it?

On Behalf of | Jan 26, 2023 | Insurance Disputes, Intellectual Property Disputes

In recent years, there has been a great migration in the workforce to remote work. With this shift, the exposure of small- and medium-sized businesses to ransomware raids, data breaches, supply chain attacks and phishing scams has exploded.

Cyber criminals are increasingly sophisticated and see smaller businesses as easy marks. Until businesses step up and proactively develop risk mitigation strategies, they are playing a kind of Russian roulette.

Any individual or business is vulnerable to cybercrime, but cybersecurity insurance is 100% imperative if:

  • Your business stores phone numbers, credit card numbers, social security numbers or other sensitive customer data.
  • Your business has a large customer base. If there’s a data breach, insurance would handle regulatory fines and the cost of customer notification.
  • Your business has high revenue and valuable digital assets. As such, it’s a much more likely target of a ransom hit.

High stakes lawsuit

The implications of cybersecurity risk are becoming increasingly as clear to the courts as they are to society at large.

In a recent case, a judge in the Northern District of California held up a proposed $37.5 million settlement by a social technology company for a 2018 class action suit concerning its collection of IP addresses and estimated location data without user consent.

The judge cited the scope of the damage—an estimated 70,000,000 people may have claims—and deemed the settlement inadequate.

In this brave new world, cybercrime is a fact of life, to be faced aggressively. If you’ve obtained cybersecurity insurance and are involved in a dispute, consulting with N experienced attorney can be very helpful.