Does Your Real Estate Brokerage Need Cyber Insurance?

If we operate a real estate agency, we will need a variety of insurances to ensure that we are protected no matter what happens. Cyber insurance is one type of insurance that many of us overlook. Understanding what cyber insurance is and what it covers is a smart strategy to protect ourselves in the event of a cyber attack.

Cyber Crime Is On The Rise

For real estate agents, the question is not if we will experience a cyber attack, but when. Malware, hacking, and data loss are all legitimate worries. Because of high-value transactions and sensitive customer information, the real estate industry is a popular target for hackers. Every document holding sensitive client information is valuable and can be used by hackers. As real estate professionals, we should be on top of commercial cyber security and know how to safeguard ourselves from attacks.

How Do Cyber Crimes Affect the Real Estate Industry?

We might be shocked to realize that small businesses are just as vulnerable as larger ones, and that the consequences are sometimes more difficult for them to cope with. Following a cyberattack, a real estate firm could face any of the following:

• We may have to pay to send notification to everyone who is affected.

• We may need to hire tech experts to help prevent repeat attacks.

• We may end up paying higher insurance premiums.

• We may be forced to temporarily shut down our e-commerce sites or virtual payments.

• Our company's reputation and/or our stock price may suffer significant damage.

What Does Proactive Cyber Security Look Like for Real Estate Firms?

People

While most people do not intentionally violate security protocols, they often do so because they are either not trained in the correct protocols or are not aware of the consequences of not following them. Conducting security awareness training and sharing basic cybersecurity knowledge with all our staff is important. The more everyone is involved in cyber security, the fewer cyber attacks our IT department will have to respond to.

Prococesses

It is also critical to implement systems for detecting and recognizing threats, securing data, and responding to incidents. Putting processes in place helps guarantee that each of these is constantly monitored. Furthermore, referring to a well-documented process will save us time, money, and our clients' trust. Cyber security is not hard, but it is easy to get into bad habits that can leave our organization vulnerable to a cyber attack.

Technology

After we've created our procedures, it's time to think about the tools we'll need to put those frameworks into action. For example, consider that DNS filtering, malware protection, antivirus software, firewalls, and email security solutions are all types of technologies used to prevent and battle cybersecurity attacks.

It is also important to consider all the technology that houses data and requires protection too, such as computers, smart devices, routers, networks, and the cloud. Remembering cybersecurity basics like physically locking all of our doors and windows and using secure passwords can help us avoid becoming a cyber attack statistic.

How Can We Benefit From A Cyber Insurance Policy?

The purpose of cyber liability insurance is to shield us against the costs of responding to cybersecurity threats. If a customer believes we did not do enough to protect their data, they may sue, costing us hundreds, if not millions, of dollars.

Real estate firms are vulnerable to cyberattacks because they handle consumer data and potentially deal in confidential transactions. Every document containing sensitive information about a client is valuable and can be utilized by hackers. These documents include:

• Offer Letters

• Purchase Agreements

• Loan Applications

• Funding Documentation

• Pre-Approval Letters

• Instructions for Wire Transfer

There are two types of insurance that we might consider buying:

First-party cyber insurance covers both direct and indirect costs associated with a cyberattack. This might include:

• Loss of income

• Forensic analysis

• Extortion or ransomware demands

• Credit monitoring services

• PR campaigns for reputation restoration

• Client/third-party notification fees

Third-party cyber liability insurance can cover our legal fees if we have to go to court. These fees might include:

• Fees to hire an attorney

• Defense costs

• Awarded settlements or judgments

What Types Of Real Estate Professionals May Benefit From A Cyber Insurance Policy?

Whether we are a closing agent, a commercial landlord, a broker, a manager, or any other real estate professional, using technology puts us at risk. This means that no matter our role as a real estate professional, we need to have cyber insurance. Cyber insurance for real estate businesses shouldn’t replace good security practices, but it is crucial as an extra layer of protection.