Nearly every business today uses computers to store, send, and collect electronic data. This data could include everything from your company’s tax information or proprietary secrets. You might also store private information regarding your employees, customers, vendors, and others.
With so much crucial data being stored on company computers and cloud-based servers, there is a risk of a cyber attack. These attacks could spell disaster for companies. Security breaches can cost your business a great deal.
Luckily, you can protect your business against the costs associated with data breaches by purchasing cyber liability insurance.
Cyber liability insurance covers the financial losses that come from data breaches, cyber-attacks, and other cyber events that result in a loss. Any company that collects, stores, or deals with sensitive data can benefit from a robust cyber liability insurance policy. There are two significant kinds of coverages: first-party and third-party coverages:
If your company directly incurs expenses from a data breach, first-party coverage cyber insurance comes into play. Coverages may be subject to a deductible, and policies can vary from company to company.
Here are the most common first-party policies:
Covers the cost to replace or restore data or software that has been damaged, destroyed, or stolen. It doesn’t matter if that data belongs to your company or to a client if that data is in your care. The losses must result from a hacker, cyber attack, virus, etc. Some policies might also cover the cost of hiring a firm or consultants to help.
If you suffer income losses or extra expenses due to data loss or a cyber attack, this policy can help.
When a hacker breaks into your system and locks you out or threatens to damage, sell, or steal private data, it’s considered a ransom attack. This coverage helps to cover ransom payments or expenses involved in responding to the attack.
Some laws require that businesses notify anyone whose data was accessed by a cyber attack, while companies often volunteer this information. Notification costs help cover the cost to inform these parties, as well as potentially providing credit monitoring services or creating a call center to help those impacted.
There are even some policies that help cover the costs of hiring public relations or marketing firms to help your company’s reputation after a data breach.
Third-party coverage applies to claims against your company by other parties that have been injured or damaged by your company’s actions or failure to act. For example, if a hacker steals one of your customer’s personal data and then sells it online. That customer could potentially sue your company for their damages. Here are the most common types:
This policy covers claims against your company for a negligent act, errors or omissions, unauthorized access, computer viruses, and more. Some plans even cover claims alleging that your company didn’t adequately protect sensitive data.
If you have suits brought against you for acts like libel, slander, defamation, copyright infringement, and more. These acts are typically only covered if they are published electronically on the internet and won’t cover things your company says or prints.
If your company is fined or penalized by regulatory agencies or you need to hire an attorney to represent you in regulatory proceedings, this policy will cover those costs.
Ultimately, cyber liability insurance helps cover the costs of:
Cyber insurance does not cover bodily injuries or property damages from your products, services, or operations. These kinds of events are covered under your company’s general liability policy.
The average cost for a policy with a $1,000,000 in liability with a $10,000 deductible is around $1,500 per year. Like any kind of insurance, cyber liability insurance quotes depend a great deal on several factors, namely:
The level of coverage your company needs, along with your deductible, can also impact your cyber insurance quotes.
With the high financial and reputation costs associated with cyberattacks, it’s crucial that companies have a strong plan to reduce their risk. It’s worth noting that small doesn’t mean safe.
Some business owners believe that cyber-attacks only happen against large companies. Hackers and cybercriminals make attempts on businesses of all sizes. In some cases, smaller companies make better targets since they tend to lack the same security measures that you find with larger enterprises.
Here is what companies should consider when planning their anti-cyber attack policies:
A data breach or cyberattack could ruin your business or costs thousands of dollars in lost sales, damages, and a hurt reputation. Even with an aggressive plan to prevent cyber attacks, companies that store, collect, and use data are at risk. The best way to mitigate your company’s risk is to partner with a cyber liability insurance company. Not only will you do everything to prevent cyber issues from taking place, but you’ll be covered in case they do. Call Assured Standard today for your free cyber insurance quote and consultation.
Arthur Williamson graduated with a degree in Business and Management at the University of California, Berkeley. He is knowledgeable about what small and big businesses require to keep operations moving.