Contractors in the construction industry are not immune to cyber attacks. Ransomware attacks, phishing scams, and other types of cyber attacks can result in data breaches and other incidents that cause financial loss, reputational harm, and legal consequences. Cyber Insurance for contractors is an essential safety net.
How can you stress the need for Cyber Liability Insurance for contractors to your clients?
Read on for information you can use about cyber risks contractors face—as well as how a strong Cyber Insurance policy can help protect them.
Why Contractors Face Major Risks From Cyber Attacks
A construction firm or other contractor may not handle as much sensitive information as, say, healthcare providers or financial institutions do. But the data contractors do handle can prove just as lucrative on illegal markets for hackers as data obtained from other industries.
Beyond handling clients’ financial details and project plans, construction companies invest substantial resources in research and development, design plans, and innovative technologies. When cyber criminals steal or manipulate such intellectual property, contractors can lose a competitive advantage and face potentially severe financial repercussions.
Cyber attacks can also disrupt contractors’ operations. Malware, ransomware, and Distributed Denial of Service (DDoS) attacks can paralyze systems or lock critical project files, bringing construction projects to halts that cost time and money.
Contractors’ increasing reliance on Internet of Things (IoT) devices also poses risks. Such IoT devices as sensors, drones, and autonomous machinery enhance efficiency and connectivity. However, hackers can use these devices to disrupt operations or gain unauthorized access to sensitive data. And the more IoT devices contractors use, the larger attack surface they present threat actors.
Moreover, construction companies can’t afford to overlook the human factor in cyber security. “Because they have [a limited number of] employees who use computers only sometimes,” explains ProWriters broker Justin Rasiul, “contractors may not deploy phishing simulations or other employee training.” As a result, employees can inadvertently expose the company to risks through social engineering attacks, weak passwords, or susceptibility to business email compromise.
Some specific cyber crime threats Rasiul has seen contractors contend with include:
Threat actors hack contractors’ systems to obtain authentic usernames, passwords, or other banking information, which they then use to transfer funds out of their targets’ accounts into their own.
Fraudsters intercept legitimate invoices from contractors’ vendors and change such key details as bank account numbers, amounts, or terms of payment. They send the altered invoice to the contractor, who pays without question because it still appears to come from a trusted vendor.
The construction industry depends on a complex supply chain consisting of various suppliers, subcontractors, and vendors. Any disruptions within this chain can have a cascading effect on projects—and contractors’ financial viability. “If [suppliers and subcontractors’] systems go down,” asks Rasiul, “how do our insured make money?”
What Cyber Liability Insurance for Contractors Can Cover
The cyber risks contractors face are real and rising. Fortunately, robust Cyber Insurance for contractors is readily available.
Rasiul advises his clients to consider these aspects, among others, when choosing Cyber Insurance for contractors:
Data breach coverage helps pay expenses incurred when an attack compromises a contractor’s sensitive information. These expenses include costs associated with notifying affected parties, hiring forensic experts to determine the breach’s source and scope, and providing credit monitoring services to impacted individuals.
- Business Interruption Exposure
Business interruption coverage compensates contractors for the income they lose as a result of a cyber event. It can also cover additional expenses incurred to temporarily relocate and resume operations while the contractor’s systems or the systems of a supplier are being restored.
This relatively recent insurance innovation is “usually offered via endorsement,” explains Rasiul. “It aims to cover costs and expenses an insured would use to prep a bid for a project, but they weren’t able to submit that bid because a cyber breach shut down their systems. We definitely try to find policies that include that language.”
ProWriters Helps Brokers Quote Cyber Insurance for Contractors
Cyber Insurance coverage can be tailored to specific contractors by taking into account their unique risks and vulnerabilities. Thorough risk assessments can identify the potential cyber threats they face. The terms and policy limits can then be customized to provide appropriate and adequate coverage.
Additionally, the policy can be tailored to the size and scope of the contractor’s operations, as well as their specific industry sector, to ensure they have the level of coverage they need.
“ProWriters sees contractors of all sizes,” says Rasiul. “Our Digital IQ Comparative Rate Platform lets brokers run a submission and obtain five, six, or seven insurance quotes at a time. If the insured is a little bit trickier and we need an application completed, we have access to dozens of Cyber Insurance providers we can approach directly to get quotes, or to add them to a coverage comparison.”
See for yourself how ProWriters’ powerful Digital IQ platform can transform how you quote and sell Cyber. Schedule a free demonstration today.