Cybercrimes have been rising in recent years and with the increased reliance on fully digital transactions in dealerships, it’s important to have a tactical plan in place to avoid major breaches. But beyond that, a dealer must have proper insurance against such attacks.
How common is cybercrime and is it really a big deal for the local hometown dealerships?
Yes. Cybercrimes cost businesses over $6 billion dollars in losses and mitigation expenses in 2021 and that number only climbs higher each year.
With only 50% of US businesses having a plan in place to combat hacking and data breaches, it shows that there is a high likelihood that many auto dealerships are not sufficiently protected either.
What is Cyber Insurance?
Cyber insurance is a type of commercial insurance a dealership can add to their existing policy to provide protection against any cyber-related risks such as data breaches, hacking attacks, and other cybercrime.
It covers the costs associated with responding to and recovering from such events which often include legal fees, notification expenses, complimentary credit monitoring fees, and any public relations efforts needed to help restore the trust of the customers who may be affected.
Think of the misplaced laptop, the deal jacket that someone picks up without being seen, or the phishing email someone opens that leads to a ransomware demand. All things that no dealership can afford.
It helps to cover privacy, data, and network exposure and as they keep evolving, so too must your insurance policy to be able to guard against loss.
Why Does My Dealership Need Cyber Insurance?
Because you -
- Collect personal data such as SS numbers and other personal identifiers
- Accept credit cards for payments
- Use computers and/or mobile devices
Every dealership fits this profile and can fall victim to cybercrimes..
What Does Cyber Insurance Cover?
Common coverages may include…
- Cyber crime: Covers the financial losses associated with social engineering (someone impersonates your client or employee), reverse social engineering, and funds transfer fraud.
- Cyber Extortion: Covers the response costs and financial payments associated with any kind of network-based ransom demands.Intangible assets can be ‘kidnapped’ and used to extort individuals through threats to shut a system down and cripple a business operation.
- Breach Costs: Covers associated costs when responding to a data breach such as forensic costs to confirm and identify the breach, all costs involved in notifying individuals that their data may have been exposed, credit protection services for those affected, and any PR costs.
- Digital Media Add-On: Helps to defend and resolve claims related to online content such as copyright infringement, defamation, unfair practices and/or negligence in connection with your dealership’s media activities. This covers claims made against you that arise from the content of your website, social media, and other promotional materials.
What Are Common Exclusions of Cyber Insurance?
There are some common scenarios that many cyber insurance policies won’t cover such as -
- Funds Transfer: Unless the funds lost are directly from the hack or breach, fund from loss or theft are not covered.
- Criminal Proceedings: Coverage isn’t available for criminal investigations, criminal action, or grand jury proceedings.
- Intentional Acts: Generally no coverage for fraud, dishonestly, criminal conduct knowingly committed by employees.
- Prior Acts: Anything that occurs prior to binding the cyber insurance policy (think pre-existing condition).
- Subsidiary Control of Named Insured: No coverage for any cybercrime incident experienced by a subsidiary that you don’t own.
As you shop for cyber insurance for your dealership, be sure to ask for ALL exclusions in coverage as it can vary between providers.
The reality that all businesses must face is that on average 93% of company networks can be hacked by cyber criminals. With that level of vulnerability, every business should have cyber insurance to protect their assets and their reputation.
As dealerships are still clawing back to profitability in a changing market, losses from hacking or a data breach would be the one of the worst things to happen. But a robust cyber insurance plan can give financial peace of mind in a not so peaceful digital business landscape.
If your dealership doesn’t have a cyber insurance policy in place as part of your umbrella commercial insurance plan, reach out to us here at DealerSure and we’ll be happy to take a look at your current policy to see how we can help protect your store better.