With the development of the internet environment, more and more people have become reliant on the avenues offered online. Unfortunately, this has only attracted individuals with malintent, evident by the stream of online security issues we've seen these past years.
Because of this, we've come to the point where cyber liability insurance has become a necessity for businesses operating online. Be it for customer security or otherwise, investing in cyber liability insurance should be a priority.
Businesses operating over the internet tend to require sensitive information; credit card information, addresses, you name it. The problem then is that tech-savvy thieves can then take advantage of gaps in your online security to steal this information. There are three general risks in this situation: security, privacy, and operations.
So how do these get addressed? First-party insurance policies are basically meant to protect the client's assets and such. Generally, these will cover any of the following:
Third-party insurance targets items such as defense costs in the case of any lawsuit aimed at the client. For third-party insurance, you can expect any of the following options:
We can't deny that having insurance coverage is an important part of life. We see this in how small businesses and big businesses alike both prioritize obtaining some form of liability coverage. Of course, the amount of coverage will vary from business to business.
Similar to how a general liability option might protect you from property damage and the like, the internet community benefits from insurance policies that provide cyber coverage.
What this means is that business owners can have that peace of mind without fear of business interruption, similar to most commercial insurance policies. Plus, it should be much cheaper than the expense of a data breach.
The significance is emphasized even more when you consider that your customer's personal information is factored in. Cyber risks these days undoubtedly include the many instances of data theft and manipulation.
Recently, Harvard Business Review reported that cyber ransoms easily range between five digits all the way to the millions, with one cyber liability case reaching $10-million.
This has been exacerbated by the COVID-19 pandemic which has caused many an enterprise to cut back expenses on cyber insurance. The result? Small business owners are unable to face the likely security breach.
Considering how cyber risks tend to be very expensive, you can expect the risk to be proportional to the price. Of course, a few might offer more accessible cyber liability coverage.
On average, you can expect to pay $1,500/year for coverage limited to $1,000,000. With these kinds of cyber liability coverage, you can expect a $10,000 deductible. Of course, the end-price may be affected by:
Coverage, be it first-party or third-party, has become a contest of who can best protect your business. The following companies have made a name for themselves in the industry as reliable options for most businesses.
Paris-based AXA is an international asset and insurance company. They offer their services in 62 countries and in 2018 have created a cyber insurance policy meant to help support risk management among small and medium businesses.
Travelers has a well-established presence in the world of cyber risk management. Providing insurance policies in the U.S., Canada, U.K., and Ireland, Travelers is well known for providing numerous policy options for different industries.
American International Group (AIG) offers cyber insurance through either a dedicated CyberEdge policy or through endorsement with specific policies and lines. They provide these services throughout 80 different countries and have been in the business since 1919.
Cyber insurance has become a necessity for businesses operating online. Data breaches in the past few years alone have increased tremendously. With the global pandemic, the situation only got worse. As mentioned before, cyber ransoms alone have reached up to $10,000,000.
With that, it would be prudent to take measures to protect your business. This goes especially so for businesses handling information such as Social Security Numbers or similar customer information.
Just like how you would choose to have some form of home insurance, keep your business protected from extreme cases of data breaches by choosing an appropriate liability policy.
While cyber insurance helps manage risk, certain limitations still exist. The insurance company does still need to keep itself safe. The following may become a cause for difficulty in making claims.
-Data breach which occurred before policy purchase
-Cyber incident due to an employee
-Cyber incident due to an insider
-Cyber incident due to previously known but uncorrected vulnerability
To be fair to the insurance companies, these limitations are quite understandable given the depth of the problem. For those, investing in adequate cyber security would be the best option. For modern business, cyber security is a must for self-defense.
The following resources can help anyone who might still be a little confused by everything involved in taking out an insurance policy. If you feel that a little more reading won't hurt, take the time to learn more about the topic.
Since 1978 the International Risk Management Institute (IRMI) has taken the role of connecting insurance professionals and risk management professionals together. The end-goal is to provide valuable educational resources as well as certifications to help develop the industry.
Similarly, Business Insurance aims to provide educational content through news and articles. Since 1967, they have operated and developed their practice keeping themselves relevant in the industry. They provide in-depth information on varying industries, including trends on cyber liability.
At the end of the day, the choice will depend on your needs. This will necessitate preparation through ample research in order to get the best out of your money. To learn more about cyber liability, check out AssuredStandard.com!
William Parker is a program administrator. He is very attentive to detail and has strong organizational skills. He studied Business Administration at Marymount California University.