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10 Reasons Architects & Engineers Need to Buy Cyber Liability Insurance

Why Buy Cyber Liability?

10 REASONS ARCHITECTS, ENGINEERS & CONTRACTORS NEED TO BUY CYBER LIABILITY INSURANCE NOW

 

1 | PRIVACY LAWS

Forty-seven states, the District of Columbia and the federal government have privacy laws requiring prompt notification if personally identifiable information (“PII”) that is not encrypted is lost, stolen or disclosed. Cyber coverage will pay for a forensic investigator to determine the source and extent of a breach, attorneys to determine if notification is required and draft notification letters, and breach response firms to provide notification services and credit monitoring for affected individuals. Cyber insurance will also cover claims by clients or other third parties for the unauthorized disclosure of confidential information. Traditional insurance such as General Liability, Crime, and Architects or Contractor’s E&O do not cover these first or third-party costs.

 

2 | FINES/PENALTIES

A construction professional’s failure to comply with the nationwide patchwork of privacy laws can lead to significant fines or penalties levied by either state or federal agencies. Cyber coverage will pay for the defense and payment of regulatory fines or penalties, none of which is covered in an E&O policy.

 

3 | PCI

Under Merchant Services Agreements, design and construction firms that accept credit card payments can be liable for forensic investigation costs, credit card reissuance costs, reimbursement of actual fraud losses and fines or penalties imposed by the Payment Card(“PCI”) if the firm is found to be non-compliant with PCI’s Data Security Standards (“PCI-DSS”) at the time of a breach. While E&O policies do not cover these contractual damages, cyber policies can provide coverage for this exposure.

 

4 | DATA DESTRUCTION

Hackers or rogue employees can destroy or damage a construction professional’s electronic records, including customer lists, computer-aided design files, and other critical materials. Cyber coverage will pay for the costs to restore or recreate these electronic records.

 

5 | SHUTDOWN

Cyber-attacks can disable, corrupt or shut down a construction professional’s computer network preventing any work to be done and resulting in a shutdown of operations and consequential lost profits. Cyber coverage can pay for the loss of profits while these systems are down awaiting restoration.

 

6 | EXTORTION

Hackers can threaten to steal or disclose data, encrypt a company’s entire network, or wreak other havoc on a business’s computer network if a ransom is not paid. Cyber coverage can pay for the cost of the ransom to end the threat.

 

7 | CONTRACTS

Increasingly, professional firms like architects, engineers and contractors are required to carry cyber liability insurance to meet bank, government and client contractual obligations. Cyber coverage can satisfy this requirement.

 

8 | CORPORATE INFORMATION

Design and construction firms often handle tremendous confidential corporate information. If this information, whether in paper or electronic form, is lost or stolen, a Cyber policy will protect the firm if sued by a client or a third party for failure to protect its confidentiality.

 

9 | REPUTATION

A design or construction firm’s reputation in the community is among its most important assets. Public relations experts can help maintain the firm’s reputation if a data breach goes public. Cyber coverage will pay for their services.

 

10 | BUSINESS ASSOCIATES/VENDORS/STORAGE PROVIDERS

Design and construction firms may transfer or entrust their data to business associates and vendors such as cloud storage companies, document storage or destruction providers, subcontractors or other third parties. In such situations, the firms remain responsible for safeguarding that data. If these third parties experience a breach, the construction firm, as the data owner, is responsible to provide notice to the affected individuals under most privacy laws. Cyber coverage will provide coverage, regardless of who caused the breach or where the data resided at the time of the compromise.

 

Interested in learning more, or securing quotes?

Contact Gwynne Wright, Architects & Engineers Practice Leader

Gwynne.Wright@founderspro.com  |  727-873-7920