United States: Cyber Scares: Protect Your Business From Online Security Breaches

On an almost daily basis, cyber criminals successfully breach the security systems and networks of U.S. companies to compromise or steal personal and private information. Cyber attacks are occurring at an unprecedented rate and can result in significant financial fallout for companies. According to Ponemon's 2015 Cost of Data Breach Study, the average consolidated total cost of a data breach is $3.8 million — a 23 percent increase since 2013.

Data Everywhere

Although large data breaches in the retail, financial services, and healthcare sectors have dominated the headlines, the real estate industry is also very much at risk. For example, last year Essex Property Trust, a California-based real estate investment trust with nearly 250 apartment communities, reported a cyber intrusion that compromised its computer networks containing personal and confidential information.

Property managers, landlords, brokers, and appraisers all maintain various types of private personal data, such as tax returns, bank account information, and Social Security numbers in rental and mortgage applications. Landlords provide portals for tenants to pay rent online using credit or debit cards. Also real estate companies retain employees' personal information.

A data breach can happen to any business, large or small. However, hackers tend to target smaller companies assuming that their network security systems are more vulnerable than those at large companies.

Given this reality, real estate companies can protect themselves by having an up-to-date network security system to safeguard their corporate data. However, no security system is completely fail-safe as hackers continually evolve and become more sophisticated. Therefore, one strategy to offset the financial consequences of a cyber attack is through designated cyber insurance.

Minimizing Risk

Traditional business liability insurance policies do not fully address online exposures, so cyber insurance can fill that gap. However, a wide variety of policies and levels of protection are available. Here's a breakdown of the typical terminology you'll see when shopping for a cyber policy.

Cyber insurance can provide both first-party and third-party coverage. First-party losses are those sustained directly by the insured company. Third-party losses are those sustained by others who assert claims against the insured company to recover those losses and typically cover the insured against privacy liability and/or network security liability.

First-party cyber policies can cover certain types of data breach costs, including expenses to:

  • retain a computer forensics firm to determine the cause and scope of a breach;
  • comply with privacy regulations;
  • notify and provide credit monitoring services to affected individuals whose personally identifiable information is compromised, including setting up call centers to field inquiries from concerned customers;
  • retain legal counsel to respond to regulators; and
  • hire public relations and/or crisis management services to restore the company's reputation.

First-party policies can also cover the cost to recreate, restore, or replace the company's lost, corrupted, or damaged software or data. The policy may also cover lost business income when operations are interrupted or suspended because of a security breach. Also available is extortion coverage for payments made in response to a ransom demand to prevent a threatened cyber attack.

Points to Consider

Here are some of the issues to consider when purchasing cyber insurance.

What type of data is covered? Data generally falls into three main categories: personally identifiable information, such as a customer's/ employee's name, birth date, email address, Social Security number, and ZIP code; protected health information, such as medical history, including medical records; and payment cardholder information, such as credit card data, including account numbers, expiration dates, and security codes.

What constitutes a covered data breach? The policy should cover unauthorized disclosure of data, whether accidental or intentional; unauthorized acquisition of data when the company's data ends up in the possession of an unauthorized third party; and the compromising of data when it is corrupted, erased, altered, or held for ransom.

What are the applicable limits? An important consideration is obviously the overall policy limit, but companies should also pay particular attention to whether the policy provides sufficient sublimits for legal, computer forensics, public relations, and/or crisis management expenses.

What are the policy exclusions? The exclusions in the policy must be read very carefully. For example, an insurer recently filed a lawsuit seeking a ruling that no coverage applies for its insured's data breach. The denial was based on an exclusion for claims "directly or indirectly arising out of, or in any way involving failure" by the insured to implement procedures and risk controls identified in the insured's insurance application and any related information submitted in connection with the application.

With the costs of data breaches rising and attacks on smaller companies increasing in frequency, real estate companies would be wise to invest time and resources to upgrade their network security systems, review their existing insurance policies, research the right type of cyber policy, and analyze the scope of coverage and policy language with an experienced attorney and insurance broker. Once hackers strike, it's too late to turn back the clock on being prepared or handling the business and reputational damage.

Originally published by Commercial Investment Real Estate, the magazine of the CCIM Institute.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.