Endorsing Cyber Insurance to a BOP Policy? Don’t do it.

Recently, I spoke with a woman who owned a small financial services business—about five employees—and was facing a severe issue and asked for my help.

This call was similar to several that I’ve fielded over the past couple of years.

She thought she had cyber insurance, and her insurance broker told her she did. However, when she filed a claim for a significant wire transfer fraud, her insurance company declined the claim.

She was shocked since she was explicitly told that she had cyber coverage, so what gives? Well, when you’re endorsing cyber insurance to a bop policy, you’re not getting real cyber coverage.

Hi, I’m Gordon Coyle, welcome to my website where we talk about the risk and insurance issues on the minds of business owners. If you have questions that brought you to this video that you’d like to dig into further, with me – reach out and let’s connect. My contact info is in the description box below.

So back to this story. The wire transfer of customer money was over $300,000, and this event will likely bankrupt her business and significantly dent her personal savings since she was going to “make good” on that money.

I agreed to review her policies, and it sickened me to see that the “cyber insurance” that her broker sold her was only an endorsement of limited coverage to her BOP or business owner’s policy. I say limited because the coverage amount was $100,000 and only covered cyber liability claims and first-party breach response claims. It did not provide cybercrime coverage, where this wire transfer fraud would have been covered.

The point of telling you this story, which is true, by the way, is to encourage business owners not to add cyber insurance to their business owners’ policy; don’t do it. It’s insufficient protection for a risk that only grows hairier daily.

Yeah, it’s a cheap endorsement compared to a full cyber policy – but cheap is usually bad. Almost every business needs REAL cyber insurance, not crappy coverage add on endorsed to their BOP policy.

The worst part of this story is that a full-blown cyber policy for this woman’s business would cost around $1,200 a year—that’s $100 a month, and I think it’s a wise investment to prevent a business from going bust, right?

Now, you may be wondering how the claim happened. Usually, these frauds are prevented by authenticating a wire before it’s sent. Was that procedure skipped?

Yes, an employee who made the wire was following the instructions of the business owner, who received an email with the wire instructions. Neither of them authenticated the instructions independently, and yes, that could have prevented this loss.

If the instructions were followed, would that mitigate the need for a stand-alone cyber policy?

No, because humans often make mistakes, forget to follow directions, click on harmful links, accidentally open attachments containing malware, and have insufficient procedures to protect their networks. On top of that, hackers are working overtime to breach small business network defenses, compromise email accounts, and hack their way into your systems.

Here’s the bottom line.

There are malicious external forces in our world trying to separate you from your money, your data, and your network. You need specific protection from these bad actors and events that can destroy your enterprise value. Don’t buy cheap cyber endorsements for a business owner’s policy – it’s not worth it. Invest in a cyber policy that has been tailored and customized for your business needs. In fact, all your business insurance policies should be customized by a skilled broker and not purchased off the shelf or bought online via a human-less experience. It’s not worth it.

If you’ve reached this point in the video and are thinking, ” This is something I need to take care of,” please don’t procrastinate. Get it done now. Whether that means contacting your insurance broker now or contacting me now, just do it! My contact info is in the description box below, and we’d love an opportuni ty to speak with you and help get your business insurance right.

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