Engineering and architecture firms have become prime targets for ransomware. This episode explains the critical difference between E&O network security coverage and true cyber liability protection.
Are design professionals’ cyber risks actually covered? For most architects and engineers, the answer might be surprising. According to the World Economic Forum, seventy-two percent of organizations reported an increase in cyber risks. The construction and engineering sector now ranks among the most targeted industries. And here’s what most design professionals don’t realize: standard professional liability policies will not protect firms for first-party claims. Let’s break down what that means. Most E and O policies include something called network security liability. But this only covers third-party expenses. That’s when a client sues a design firm for transmitting a virus to them. It covers the client’s costs. It does not cover the design firm’s costs when it is attacked. Only true cyber liability insurance covers first-party costs. That’s the ransom demand. That’s two weeks of system downtime. That’s paying fifty thousand dollars for a fake invoice. These are real scenarios that design firms face, and standard E and O policies do not cover them. The numbers tell the story. Fifty-nine percent of architecture, engineering, and construction firms experienced a cybersecurity threat in the past two years. Cyberattacks on construction companies doubled in early twenty twenty-four compared to the same period the year before. Design professionals face ransomware attacks at more than twice the rate of other industries. Why are engineering firms such attractive targets? Three reasons. First, deadline pressure. When ransomware locks project files three days before a critical submittal, paying the ransom looks like the only option. Attackers count on that pressure. Second, valuable data. CAD files, client information, and infrastructure plans. Third, smaller IT budgets than the data would suggest. The global average cost of a data breach reached four point eight eight million dollars in twenty twenty-four, according to IBM. That’s a ten percent increase from the prior year. Yet only ten to twenty percent of small and mid-sized businesses carry adequate cyber coverage. Here’s the good news. For design firms with revenues between one million and five million dollars, annual cyber insurance premiums typically range from one thousand to three thousand dollars. Compare that to the potential cost of an uninsured breach. What should design professionals do? Start by pulling the current policy. Read the cyber-related language. Look for exclusions and sublimits. Then consider what two weeks of downtime would cost. What would happen after paying fifty thousand dollars to a fake invoice? What would happen if the firm could no longer access design plans and email? If those questions raise concerns, it’s time for a real conversation about standalone cyber coverage. To learn more about cyber insurance options for architects, engineers, and design professionals, visit risk specialty group dot com. That’s risk specialty group dot com.
Risk Specialty Group
City: Houston
Address: 675 Bering Dr.
Website: https://riskspecialtygroup.com/
Phone: +1 713 552 1900
Email: info@riskspecialtygroup.com