Cybercrimes reported to the IC3 (the FBI’s Internet Crime Complaint Center) have more than doubled over the past five years, resulting in $6.9 billion in losses in 2021 alone. As far back as 2014, the Small Business Association reported that half of all small businesses had been victims of cyberattacks. Considering that technology and cybercrime have both evolved, it’s safe to say that cyberattacks continue to pose a real risk for small businesses.
As a rental property business owner, you have access to sensitive tenant data, like personally identifiable information (PII) and bank account information. If you use technology to help manage your property, such as email or an online payment portal, data response and cyber liability insurance could offer important financial protection for a variety of situations.
Here’s what you need to know.
What Is Cyber Liability Insurance?
When your business experiences a data breach or cyberattack, the financial and personal information of your tenants, employees, and vendors could all be exposed. That information could then be sold on the dark web and/or used for fraud, identity theft, or financial theft. As the rental property business owner, you could be held liable for any damages tenants, employees, or vendors experience resulting from a data breach in your business.
This is where cyber liability insurance comes in. It helps protect your business from financial damage stemming from cybercrime or other technology-related risks. Cyber insurance isn’t typically included in standard businessowner policies, but any business that uses technology – be it email, an online payment portal, or an online tenant application system – should have it.
What Are the Financial Risks of Cyberattacks?
If tenant, employee, or vendor data is compromised or lost, the costs to address the situation can quickly climb into the thousands. Several expenses your rental property business might encounter after a data breach include:
- Liability: If tenants and other affected parties incur expenses or damages resulting from the data breach, you’ll likely be liable for reimbursing them in full.
- System restoration: If a cyberattack harms your business devices, websites, or files, repairing or replacing them will be necessary, which typically means buying new equipment and hiring a professional.
- State requirement expenses: Most states require businesses to contact all affected parties in writing if it’s confirmed – or even suspected – that their data has been compromised, and some states require you to offer credit monitoring services after a breach to help those affected detect suspicious activity early on.
- Fines: You may have to pay federal and state fines if it’s discovered that you didn’t take adequate steps to protect tenant, vendor, and employee information, as required by law.
- Lawsuits: Anyone affected by your business’s data breach could file a lawsuit against you to seek compensation for damages. Even if you win the case, you’ll still need to pay lawyer and court fees.
What Does Cyber Liability Insurance Cover?
Fortunately, many of the costs noted above should be covered by a sound data response and cyber liability insurance policy.
First-party cyber insurance can help cover costs related to:
- Non-liability legal expenses, including counsel, fees, and fines
- Investigation services
- Notification services for affected parties
- Data remediation and restoration
- Cyber extortion and fraud
- Reputation restoration
- Business interruption
Third-party cyber insurance can help cover costs related to:
- Compensation for tenants, employees, and vendors whose information was compromised
- Legal fees, judgments, and settlements from lawsuits
- Regulatory inquiry responses
What Difference Can It Make?
According to a report released by IBM, the average global cost of a data breach in 2022 was $4.35 million. While smaller businesses won’t see costs quite that high, they aren’t immune to the financial effects of data breaches and cybersecurity attacks. In fact, it was reported in 2014 that roughly half of all small businesses who experienced a cyberattack closed their doors forever within six months of the event.
Imagine, for a moment, that a hacker gains access to your online payment portal and captures the personal and financial information of three tenants before it’s discovered. You notify the tenants affected, offer to pay for credit monitoring services, and hope nothing else comes of it. However, the tenants begin to see fraudulent charges on their bank statements and new accounts on their credit reports as a result of the breach.
The process to reverse the damage to their finances and credit standing is time-consuming and expensive, and they each file a suit against you to seek compensation. They win, and you’re ordered to pay each tenant $3,500 to cover their expenses and suffering – a total of $10,500. This amount doesn’t include expenses like court costs, lawyer fees, government fines, and breach investigations, which add another several thousand.
Without cyber insurance, you would have to pay the full amount on your own, spelling disaster for your finances and future. With appropriate cyber coverage, the amount you must pay would be dramatically decreased, if not entirely eliminated – protecting you and your rental property business.
Secure Your Cyber Coverage With Millers Mutual
At Millers Mutual, we offer products that keep up with the needs of rental property business owners, even as the world evolves around us. Our data response and cyber liability insurance offers first- and third-party coverage with limits up to $1,000,000 for exceptional financial protection.
Protect your peace of mind and financial future with coverage that has your back. Reach out to Millers Mutual to see how our cyber insurance options will work for you.