January 18, 2019
Cyber attacks are becoming more and more of a threat to practically every industry in the United States, and real estate is no exception. Given the industry’s access to sensitive information and opportunity to hold on to financial data of clients, real estate is right in the middle of the mix of cyber threats.
The average cost of a cyber attack will ring in around $150 million by 2020, with a new cyber attack taking place every 39 seconds. Mix that in with the rising trend of digitally tending to real estate tasks, such as appraising, signing off on things and even taking care of finalizing a home purchase through blockchain, and you have outlined the perfect opportunity for cyber hackers.
Real estate professionals should understand the risks involved with cyber threats and how they could affect their work and their industry. Here are the top cyber liability risks in the real estate industry:
All cyber threats have been able to be guarded against in some way, but hackers are finding more sophisticated ways to infiltrate networks and steal information. Real estate professionals can safeguard financial loss (consider the average cost of a cyber breach listed above) by investing in real estate insurance that gives a financial backstop in times of liabilities. But it’s understanding the threats out there that can put you ahead of the curve.
Real estate professionals handle a variety of personally identifiable information every single day. Hacking, phishing, and malware are just some of the cyber crimes that need to be on their radar. Typically, cyber crimes occur because of the access to information such as driver’s licenses, social security numbers and bank accounts.
Real estate professionals might record driver’s license information when they’re working with new clients as a safety precaution; social security information is needed in order to complete a short-sale transaction, for example; and financial information is needed for payments for appraisals, inspections, and other services. The fact remains that real estate agents must pull this information from clients to complete their work, which means they’re open to many cyber crimes.
When people think of data breaches, they typically think of financial institutions or retail companies or the health care industry. But real estate is keeping up the pace as transactions are done more digitally. This is especially true for real estate agencies and businesses that are smaller in size, making them a target just like how other small businesses are. In fact, 43% of all data breaches aim for small businesses, highlighting the fact that cyber criminals don’t just go after the big fish.
Real estate professionals in the digital age must rely on mobile devices and web apps to communicate with clients and possible clients, going over things like financial documents, contact information and other records. This leaves them and their clients susceptible to attacks. These devices can be either physically stolen or hacked into virtually. This is why it’s important to back up sensitive information and install the latest cyber software to do your best to keep cyber criminals out.
Going hand-in-hand with data loss are data breaches. It’s simple and cost-effective for small businesses in the real estate industry to outsource their information storage and maintenance to third parties. From here, it may be an assumption that the burden of data protection is no longer their responsibility, but this is false.
Using a third-party IT service can expose a real estate firm to additional cyber liability risks. Security deficiencies make up about two-thirds of data breach incidents related to third-party IT. Real estate agencies and operations should understand the risk associated with this option and be sure to make the right choice, considering the overall cost of loss, when looking for data security protection options.
About Associations Liability Insurance Agency (ALIA)
The ALIA Team (part of the Riverton Insurance Agency Corporation), specializes in helping real estate professionals find the affordable and comprehensive coverage they need, without the hassle. ALIA dates its roots to 1991 with the founding of FREA, Foundation of Real Estate Associates. In 2013, ALIA was created to work with multiple insurance companies thereby broadening the portfolio of products to customers. In 2017, ALIA was purchased by Riverton Insurance Agency Corp.