Cyber liability insurance is a modern solution to a twenty-first-century problem.
Because it’s not enough to cover your financial assets against the potential of physical loss; today’s business owners also have to cover themselves against the potential for lost or stolen data or targeted cyber attacks.
And your existing business insurance policies, such as your commercial property and general liability coverage, simply aren’t designed to protect you in the event of a data breach incident.
No matter what type of business you operate, there’s a very good chance that you collect or store data. Does your business accept credit card payments? Use a laptop, computer, or tablet? Collect client information? You’ve got data… and it’s at risk.
Data Breach Attacks are on the Rise and Small Business is a Big Target
More than half a billion records were lost or stolen due to data breach attacks last year. The aftermath of a cyber attack or lost data can be catastrophic for a small business. The average cost of a small business data breach is $38,000, according to a Kaspersky report. That’s just the direct cost of an attack; indirect costs average another $8,000 in addition.
More than half of businesses can’t afford a single data breach incident; the US National Cyber Security Alliance found that 60% of small businesses have to close their doors after a cyber attack.
If your business is going to survive in the event of a data breach or direct cyber attack, you should consider a comprehensive cyber defense plan that includes cyber liability coverage.
How Does Cyber Liability Insurance Work?
Cyber liability coverage is there to help you with the costs associated with a data breach. Those costs could include:
- Investigations
- Business losses and downtime
- Data recovery
- Cyber extortion reimbursement
- Customer notifications and credit monitoring
- Lawsuits arising from the incident
- Regulatory fines or penalties
What Cyber Coverage Doesn’t Do
Insuring your business against potential data breaches or cyber attacks can be the one thing that ensures your survival after an attack, but cyber coverage has some limits.
Cyber insurance won’t shield you from a breach or hack occurring in the first place. It won’t:
- Prevent employees from losing laptops
- Prevent hackers from accessing your system
- Prevent credit card information from being stolen during a POS attack
While cyber insurance will pay for the costs of recovering data and restoring systems, it won’t pay for the costs of upgrading your systems to be more secure after a breach occurs.
And while cyber coverage is there to help with the costs of business losses, interruption, or downtime specifically related to the breach, it won’t cover any resulting business losses if word of your breach affects the amount of customers who walk in your front doors.
Does Your Business Need Cyber Coverage?
Your insurance policies are put in place to safeguard your business from a number of accidental or unintended disasters. Your property insurance is there to cover your losses if a burglar breaks into your business after hours and steals your inventory. Your general liability policy is there to cover your losses if a customer sues you for bodily harm or damage to their property. But only cyber liability coverage is designed to cover your losses from the repercussions of lost or stolen data.
Credit card information can be stolen. Employees can lose laptops. Your customer information can be hacked. The software programs that you use to run your business can be vulnerable. Even checking your email is a risk; click on the wrong link in the wrong message and hackers can have access to your entire database.
Does your business need cyber coverage? In most cases, the answer is yes.