Many business owners have instigated work from home policies following the pandemic, leading to greater cyber security risks. Some challenges include employee access issues, phishing emails, the rise of social engineering attacks, and more. As a result, cyber liability insurance has created new policies to address these cyber exposures.
With a 2019 report from the World Economic Forum explaining how cyberattacks are the second-highest business risk on a global level, network security failure is something that every company, big and small needs to address. Policies covering the cost of data breaches, fraud, ransomware, and other crisis management expenses help protect your organization from paying high financial and legal costs.
Many small business owners wonder whether they need to invest in cyber liability insurance in the first place. However, if your company stores or deals with any customer data on computer systems, you'll need a cyber policy. When it comes to handling credit card numbers and other sensitive data, it's better to be safe than sorry.
Although the most common targets of hackers tend to be financial providers and those in the healthcare industry, any business can be vulnerable to cyber threats and a ransomware demand, making cyber liability policies a crucial investment.
A cyber insurance policy can pay for liability claims including:
On top of more common types of insurance for your business, a cyber insurance policy is often purchased on top of a general liability policy. While general liability insurance deals with claims related to bodily injury and property damage by your company, cyber insurance deals with claims relating to stolen Social Security numbers, bank account numbers, and health records.
First-party coverage deals with costs directly related to your company. In the event that you suffered a data breach, it can shoulder some of the cost of notifying customers and paying for data restoration, as well as paying for credit monitoring services for those impacted by threats.
It is also known as data breach insurance, which is also recommended for retailers and those whose coverage needs include dealing with sensitive data that can be misused by third parties.
In summary, first-party cyber liability insurance can cover:
On the other hand, third-party coverage deals with claims made against your company by customers. For instance, if you fail to prevent a data breach on your computer system, a customer could sue you for leaking their information. It helps cover the cost of legal fees and any settlements.
Third-party cyber liability insurance can cover:
This type of cyber liability insurance can provide you protection when purchased on top of your errors and emissions policy.
Often, we tend to hear about larger businesses being targeted by hackers. However, small companies are also at risk for unauthorized data access. Small businesses typically don’t have the financial resources to cope after a cyber attack, and cyber liability insurance coverage options can help cover some of the legal fees involved.
This depends on the insurance company you choose, as some cyber insurance contracts have limitations that your business should be aware of. However, most companies don't cover risks such as:
-Any potential profit you may lose in the future
-A loss in value due to theft of intellectual property
-The cost of hardware and software upgrades after a data breach has occurred.
The National Cyber Security Alliance’s CyberSecure My Business™ is a national program that helps small and medium-sized businesses protect customer information and their employees online. They provide a program with series of workshops based on the National Institute of Standards and Technology (NIST) Cybersecurity Framework to educate the SMB community on cyber risks.
In this day and age, cyberattacks and data breaches are very pricey and increasingly common. Companies of all shapes and sizes should look into purchasing both first and third-party cyber insurance since statistics show that 60% of small businesses go under within six months of a cyberattack.
Cyber insurance policies can help your business pay for costly expenses including legal fees, fines, and breach coaches that can get you back on your feet as soon as possible. For more information on what extent of cyber coverage you need for your business, contact us today at Assured Standard.