Cyber Insurance Becomes Necessity for Physicians' Offices

Growing data breaches make cyber insurance as indispensable as fire insurance for physicians.

The theft of valuable client information is so pervasive that cyber liability insurance is now as important for physicians’ offices as property and liability insurance.

A data breach can damage your practice far more than it damages a big business because there are fewer resources and employees to handle the fallout. It can put you out of business.

Any practice that has a website, uses social media, or stores customers’ personal records in its computers is vulnerable to a cyber-attack. If your practice has a computer, you probably need cyber insurance.

Like other types of insurance, cyber insurance pays for a lawyer to defend you in a lawsuit and money to cover losses. But it often does much more:

Handling customer calls. If customer information is hacked, the business might get hit with a deluge of phone calls that would tie up the staff for weeks. Many insurers provide a dedicated call center so that customers can call there instead to have their problem resolved.

Meeting regulatory and compliance issues and performing identity restoration after a breach could tie up an office for weeks. That job can be transferred to the insurance company via your policy.

Social media liability. A hot-headed employee might libel someone on Facebook or Twitter. Libel and slander on social media isn’t covered by most standard business policies. Cyber insurance generally does.

Data recovery. A virus could destroy the business’s software and data and infect customers’ computers. The policy pays for the cost of restoring the computers or buying new ones if necessary.

Crisis management. Cyber policies usually provide money to hire a public relations firm to help protect your reputation during a crisis.

System monitoring. At least one insurer provides a free monitoring application with its policy. The app monitors the customer’s computer system 24/7 and sounds an alert when there’s a breach.

Paper files. Most cyber policies cover electronic and physical records. For instance, if you have a printed list of clients’ Social Security numbers and it’s stolen, the policy would cover the costs of notifying customers since criminals could use it to steal identities online.

Before 2014, people resisted the idea of buying cyber coverage because they thought it couldn’t happen to them. But after the massive data thefts at Home Depot, Target, and other retailers, physicians’ office are realizing they need cyber coverage.

The best place to start shopping for it is with your current insurance company. This gives you a little more leverage to negotiate a multi-policy discount. But if your current carrier or broker doesn’t seem to be doing the job, shop around.

It’s difficult to spend more on insurance. But it’s worth it. Cyber criminals are relentless and smart. Sooner or later, almost every physician’s office is going to face some kind of breach or attack.

The cost of cyber insurance varies greatly. It can raise the cost of your property/casualty coverage up to about 20%, but is usually less.

Elizabeth Sullivan is vice president of E.G. Bowman Company, an independent insurance brokerage in New York City. Founded in 1953, Manhattan-based E.G. Bowman offers all types of commercial and personal insurance. It is one of America’s premier minority-owned independent insurance agencies. More information is online at www.egbowman.com, www.facebook.com/egbowmanco and www.twitter.com/egbowmanco. She can be reached at esullivan@egbowman.com.