Cyber Insurance for Real Estate Firms & Businesses: How it Works
In 2019, the most popular form of cyber attack in the United States was phishing attacks. Worldwide, there were over 30,000 cybercrime incidents in the same year. This phenomenon is prevalent in the United States, where individuals, businesses, and even government parties have become the victims of targeted cyber attacks.
For real estate businesses, you may very well be storing integral data online for your business, or you may keep your customers’ information there. You could be a developer, an agent, a broker, an appraiser, an investor – it doesn’t matter. The risk still remains. If you use technology, you need protection for your real estate business’s vital data, or you could find yourself out thousands of dollars and having to recoup and recover your firm’s reputation, loss of revenue, disruption, and intellectual property following an event. Here’s where having cyber insurance for your real estate firm is critical.
How Cybercrime Can Impact Your Real Estate Business
Businesses that deal with cybercrime may not be your large, multi-million-dollar firms. In fact, businesses of all sizes are at risk of cyberattacks, and small businesses are even more likely to suffer bigger losses due to the lack of cybersecurity measures in place to help them recoup or defend themselves. Here are a few ways that cybercrime could impact your real estate business:
Your business may have to deal with increased costs for an ongoing time, including costs for public relations support, notifying expenses, tech expertise, and increased premiums.
Your business may have to alter its business practices temporarily, such as shutting down certain online components like e-commerce sites and virtual payments.
Your business may experience significant reputational damage and may see a decrease in share prices and performance.
Your business may be the victim of stolen intellectual property.
Your business may face indirect costs due to operational disruption.
Your business may experience a loss of revenue.
Failing to protect your real estate business’s vital data and your client’s sensitive information may ultimately cost your firm thousands or even millions of dollars. Businesses, particularly high-risk industries like real estate, rely on their stored information. Cybercriminals are becoming more sophisticated in their efforts. Real estate firms may be in the business of handling the following sensitive documents:
Wire transfer instructions
Proof of Funds documents
If anything were to happen to these documents, your business and your business’s reputation could be on the line.
Enter cyber insurance for real estate.
Here’s why it’s crucial.
Cyber Insurance for Real Estate: What it Covers
In the digitized world of today, we depend on our stored data and utilize technology to our advantage whenever we can. We can use Artificial Intelligence (AI) to do analysis. We can automate mundane everyday tasks to free up our workers for more pressing matters. The use of cloud services is common. Unfortunately, the more we use technology, the more attractive of a landscape it becomes for cybercriminals.
Cyber insurance for real estate is designed to protect your business against digital threats. Because real estate businesses handle customer data and potentially deal in confidential transactions, they are at high risk for cyberattacks. If a customer feels you didn’t do your due diligence to protect their data, they may sue you – which, again, could put your business out thousands or even millions of dollars.
First-party cyber insurance for real estate businesses covers direct or indirect costs that may come as a result of a cyberattack, such as:
Loss of income
Extortion or ransomware demands
Credit monitoring services
PR campaigns for reputation restoration
Client/third-party notifying fees
Third-party cyber liability insurance is generally designed for professional businesses, such as real estate agents. This insurance may cover arising legal fees if a situation comes to court in addition to a vast expanse of other costs, such as:
Fees to hire an attorney
Awarded settlements or judgments
Whether you’re a closing agent, a commercial landlord, a broker, a manager, or any other real estate professional, using technology puts you at risk. Cyber insurance for real estate businesses shouldn’t replace good cyber hygiene and security practices, but it is crucial as a last layer of protection.
How Much Does Cyber Insurance for Real Estate Businesses Cost?
Cyber insurance for real estate firms is critical, but many business owners and real estate agents hesitate because of increased premiums. With any insurance policy, there are certain characteristics of your real estate business that will drive costs up or down. Put simply, it depends on the business that you run.
For $1 million in coverage, the average cost of cyber insurance for real estate can cost between $750-and $2,000. A $250,000 option can cost as little as $325 per year. You can choose to increase your limits and deductible if you want, but it will largely come down to the type of business you run. Insurers will consider:
How much data you use/sensitivity
Projected annual revenue
Amount of coverage
Type of coverage
Existing cybersecurity measures
If you want to save on your costs for cyber insurance, real estate businesses and agents can review their existing cybersecurity measures and do their due diligence to ensure they are focusing on adequate prevention and management. This includes training employees regularly, doing background checks, installing firewall and malware software, using multi-factor authentication, and a password manager.
The fewer claims you make, the lower your insurance premiums will be with time. Note that the most common risk when it comes to cyberthreats is human error. Therefore, your first place to review should be your employees. Ensure that each and every one of your staff members are rigorously reminded about the importance of cybersecurity and consider implementing a yearly training program.
To further discuss the benefits of cyber insurance for real estate, contact one of Hitchings Insurance Agency’s representatives. Real estate is a high-risk industry when it comes to cybercrime, so ensuring you have the cybersecurity you need is imperative to your business’s longevity and success.