With the rise in hacking threats, more healthcare providers are buying cyber liability insurance to safeguard against data breaches and online attacks. Yet, a lot of them are still unsure about what these policies actually cover, how they operate, and how expensive they can be.

Cyber insurance provides coverage for losses and damages caused by various incidents like data theft, exposure, ransom, or unauthorized sharing. It includes intentional acts like hacking or ransomware, as well as accidental events such as losing a laptop with unencrypted patient data or a coding mistake that exposes patient information.

Why is It so Important?

A thorough policy also includes protection for paper records since many details are still kept in physical form. This insurance helps healthcare providers manage the aftermath of a data breach, which can range from minor to severe impacts.

It covers various losses and expenses, including:

• fines,
• income loss from downtime or patient departure,
• hiring IT professionals to fix the breach,
• setting up a call center for patient inquiries,
• hiring a PR firm to handle negative publicity, retaining lawyers for patient lawsuits,
• paying ransom to recover hijacked data.

Typically, the coverage applies to data rather than the computer hardware used by the practice, such as laptops, smartphones, tablets, or servers, which are usually covered by a general business insurance policy.

Types of Coverage

A comprehensive policy consists of both first-party and third-party coverage. First-party coverage takes care of the policyholder's losses, like lost income, business interruptions, IT forensics, and data recovery. On the other hand, third-party coverage compensates for damages caused to others due to a data breach, such as legal expenses from lawsuits filed by affected individuals.

Many practices without cyber insurance may have some protection under their malpractice or general business policies, but it's typically limited to around $30,000 in damages and comes with exceptions. Physicians should assess their existing coverage before deciding whether to invest in additional cyber insurance.

Healthcare businesses and organizations face significant cyber risks due to the storage of patients' and customers' protected health information (PHI). The demand for PHI on the black market is high because it holds great value. Cybercriminals can use this information for identity theft, insurance fraud, and other malicious activities. Sensitive details like:

• patient names,
• birth dates,
• contact information,
• Social Security numbers
• and medical records which are commonly stored in patient records.

Additionally, healthcare entities often have payment information, such as credit card numbers, on file. Healthcare companies are prime targets for hackers, as they are considered "one-stop shopping" for cybercriminals.

HIPAA safeguards patients' sensitive data, and organizations can face hefty fines and penalties for data breaches. Even with precautions in place, businesses are responsible for any breaches that occur.

Essential Insurance Policies for Healthcare Professionals

While cyber liability insurance provides protection against cyberattacks and data breaches, healthcare professionals must also be prepared for a variety of other risks. To ensure comprehensive coverage, consider the following key policies:

General Liability Insurance

General liability insurance is crucial for healthcare professionals as it covers legal expenses related to third-party bodily injuries and property damage. For example, if a patient slips and falls in your clinic, or if you accidentally damage a patient’s belongings, this policy can help cover the associated costs. Additionally, it protects against advertising injuries such as claims of slander or libel.

Business Owner’s Policy (BOP)

A Business Owner’s Policy combines general liability insurance with commercial property insurance, offering a cost-effective solution. By bundling these coverages, healthcare businesses can protect themselves from a variety of risks at a lower premium compared to purchasing the policies separately. The commercial property insurance component covers the physical assets of the business, including the building, equipment, and inventory, against perils like fire, theft, and natural disasters.

Workers’ Compensation Insurance

Workers’ compensation insurance is typically required by law for healthcare businesses with employees. This policy provides coverage for medical expenses and disability benefits if an employee is injured or becomes ill as a result of their job. For instance, if a nurse sustains a back injury from lifting a patient, workers’ compensation would help cover their medical bills and lost wages during recovery.

Professional Liability / Medical Malpractice Insurance

Professional liability insurance, often known as medical malpractice insurance, is essential for healthcare professionals. It protects against claims of negligence, errors, or omissions in the provision of professional services. If a patient alleges that a medical error or oversight led to their injury or worsened their condition, this policy can help cover legal fees, settlements, and judgments.

By securing these additional insurance policies, healthcare professionals can better safeguard their practices against a broad spectrum of potential risks and liabilities.

Conclusion

When digital health records and electronic communications are integral to medical practice, cyber insurance has become a critical safeguard against the growing threat of cyberattacks and data breaches. The sensitive nature of patient information and the increasing sophistication of cybercriminals make it imperative for medical practices to invest in robust cyber insurance policies.

Cyber insurance provides vital protection by covering the costs associated with data breaches, including notification expenses, legal fees, and recovery efforts. It also supports medical practices in managing the aftermath of an attack, ensuring business continuity, and maintaining patient trust.

Beyond financial protection, having a comprehensive cyber insurance policy demonstrates a commitment to data security and patient privacy. It reassures patients that their personal information is safeguarded against potential cyber threats, enhancing their confidence in the medical practice.

So, cyber insurance is an essential component of risk management for medical practices in today's digital landscape. By proactively securing this coverage, medical professionals can better protect their practices from the financial and reputational damages associated with cyber incidents, ultimately ensuring a more secure and resilient healthcare environment.