5 Reasons Why Construction Companies Need Cyber Insurance
The construction industry can have very complex projects that involve different information and financial exchanges between partners, subcontractors, regulators, suppliers, software systems and more. On top of it, most construction firms don’t have large IT departments or little experience managing information security. This combination is a sweet spot for hackers.
In today’s age, the question is not whether you will fall victim to a cyber-attack, but when. Here are five reasons why construction companies need cyber insurance.
If you’re performing any transactions that involve wiring money to a third-party, you’re a target for cybercriminals. Social engineering is happening in just about every industry and typical crime policies do not cover this exposure. You’ll want to make sure you have a cyber policy in place that has high limits for funds transfer coverage.
- Large Commercial Contracts
Did you know an HVAC contractor was the reason for the 2013 Target breach that affected 41 million consumers? If you’re performing work for large commercial organizations, you may have access to their networks, systems and internal processes. This access can be exploited. When competing for a large commercial contract, a cyber policy is crucial.
- Cyber & Privacy Liability
Construction firms and contractors collect sensitive information about their clients and ongoing projects. This data can include personally identifiable information, payment information, architectural plans, and even insight into a client’s internal network. If this information is lost, you’re responsible for notifying the affected individuals and may face lawsuits, fines, and incredibly high forensics costs.
- Business Interruption
If your construction firm is relying on technology to run day-to-day operations, you need adequate Business Interruption coverage in your cyber policy. Are you using a laptop to track the progress of your job or strategically plan next steps and communicate with other individuals? If you can’t access this information, there’s potential for a serious loss of profit.
- Reputational Harm
If your customers or partners feel your construction firm is not adequately protecting their financial assets and information, you could lose their business. A data breach or cyber-attack may not only result in the loss of current clients, but also future clients. Reach out to your insurance broker for a cyber policy that provides you with full limits for reputational harm in the event you get hacked.
To put this into perspective, here’s an example of a cyber-attack a large contractor faced just a few years ago:
A large contractor used an outside vendor to provide tax filing and information services for employees’ W-2 and 1095 tax forms. Their vendor noticed suspicious system activity and the construction company’s employees later had fraudulent tax filings. As the data owner, the contractor had the responsibility of notifying their employees and provide credit monitoring. Often, third party vendors place liability back upon the data owner if they lose information.
Contact the Assurance ‘A’ Team to learn more about adding this essential coverage to your portfolio.
- 10 Tips for Buying Cyber Insurance
- Do I Need Cyber Insurance for My Business?
- Cyber E-Book
- Top 5 Cybersecurity Risks Every Business Leader Needs to Know Webinar Replay
ABOUT THE AUTHOR