Every Family Entertainment Center relies on technology – online reservations, party bookings, point-of-sale systems, employee payroll, even offering free WiFi for guests. Each of these creates potential cyber exposures. Yet when most people hear “cyber liability,” they immediately think of hospitals, banks, or social media companies – not FECs. The reality is that FECs face just as much risk, and in some cases even more, because they process thousands of guest transactions and often lack the layered defenses of larger corporations.
Before we go further into this, let’s talk about what makes up a cyber policy. Many policies will include first-party and third-party coverages. A few examples of first-party coverages are data breach response costs, digital asset restoration, business interruption, and cyber extortion & ransomware. Examples of third-party coverages are network security liability, privacy liability, media liability, and payment card industry (PCI) costs.
Here are some brief examples for each of those:
First Party
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Data Breach Response Costs: include notification of affected individuals, hiring credit monitoring services, and call center support.
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Digital Asset Restoration: the cost to repair, replace, or restore lost/corrupted data from a breach
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Business Interruption: replacement for lost income or expenses due to a cyberattack
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Cyber Extortion & Ransomware: where legally allowed, this includes payments and costs allocated to handle extortion demands
Third Party
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Network Security Liability: coverage to defend lawsuits for failing to protect data or prevent the spread of the breach or virus
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Privacy Liability: regulatory actions or lawsuits for mishandling personally identifiable information (PII) or protected health information (PHI)
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Media Liability: claims related to defamation or copyright infringement in online content
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Payment Card Industry (PCI) cost: fines or penalties from credit card companies if cardholder data is compromised
First-Party Example – Business Interruption
Imagine your business suffers a denial-of-service attack during fall break—a peak time when schools are closed, and families are looking for activities. Because your reservation system is offline, customers can’t book online, and you’re forced to remain closed through the break. Afterward, you calculate $100,000 in lost sales plus a $50,000 bill to restore your systems. In this scenario, the Business Interruption coverage within your cyber policy could absorb the entire $150,000 loss.
Third-Party Example – Privacy Liability
Now let’s consider the liability side. Suppose your general manager mistakenly emails employee W-2 forms to a vendor. An affected employee sues for identity theft damages, leading to litigation, defense costs, and settlements. By the time the dust settles, the total payout is $400,000. Without a cyber policy, a simple mistake like this could deal a devastating financial blow to your balance sheet.
Cyber liability policies vary in pricing, but for the most part, they are going to be a fraction of your other liability policies unless you operate in a digital-heavy industry. Cyber coverage is one of the most affordable ways to transfer risk. For most FECs, a $1M cyber policy costs less than the revenue from a single busy weekend, while the average cost of a cyber claim for small to mid-sized businesses is over $150,000. For many FECs, that could mean wiping out an entire year of profits.
If you choose not to carry this coverage, a great question to think through is “What am I risking by not having this”? MSSP Alert reported that 62% of businesses filed a cyber insurance claim in the last 12 months. Cyber incidents don’t just happen to large corporations – they increasingly target businesses like FECs, where online reservations, card payments, and guest data are part of daily operations.
If you’d like to see where your FEC may be vulnerable and how a cyber policy could protect you, let’s set up a time to review your operations and explore a tailored solution.
