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Computer Fraud and Cyber Liability: What's the Difference?

Remove the words 'computer' and 'cyber' and you're left with two familiar terms: fraud and liability. 

Computer fraud, data breach, data theft, hacking, phishing, and the rest of the wide world of electronic-based crime is on the rise, and targets are not limited to large corporations -- if you have retail shop with 8 employees and one of them accidentally downloads malware that captures credit card numbers, that could easily become a big cost not covered by general liability.

Dave, the account manager at one of your vendors, emails to let you know the company is switching banks. It's going well, but there's a lot of catching up and so on -- anyway, he says, we'll need your routing number or a copy of a voided check when you get a chance. 

That's computer fraud. Giving your routing number away here would result in an unauthorized withdrawal from your bank account. In this case, the employee called Dave to verify, and Dave had no idea what was going on -- the vendor wasn't switching banks at all. 

Tyler from IT calls you at your desk. I don't think we've met, he says, I'm the new guy. I'm showing we've got a breach attempt at your computer. It's nothing serious, but I'll need your login so I can get in remotely and clean it up. Go ahead and restart and I'll call you when I'm done -- gimme ten minutes.

Yeah, there's no Tyler in IT, and even though it looked like a company number, it wasn't. As soon as the employee restarted the computer, it was hacked and the data breach was real. 375,000 names and pieces of personally identifiable information were stolen from the company. That's Cyber Liability. 

Broadly speaking, computer fraud is when your property is stolen from your premises or from a third party (like a bank) using a computer or computer system. Cyber Liability is insurance coverage for your responsibility to others after their data is stolen from you.

Discuss all of this with your agent. Or contact us.