Thirty years ago, the idea of investing in a form of cyber liability insurance would have been an afterthought. But times have changed and more information than ever is being stored on computers and servers managed by small businesses. Personally identifiable information (PII) has become a sensitive asset that customers trust with your business whenever they sign up for services or make a purchase. It’s your responsibility to keep that information protected from digital threats.
Unfortunately, even the best cybersecurity precautions can’t protect against all possible threats. Some of the biggest brands across multiple industries have fallen victim to advanced hackers despite their massive budgets and extensive security measures. If the PII of customers using multi-million dollar companies is at risk, then it’s safe to assume that the customers who use your service are exposed to some risk as well.
Cyber insurance, also known as cyber liability insurance, is one way that you can help mitigate that risk and reduce the overall financial burden of a cyber attack. Cyber insurance can help you prepare for a potential threat as well as respond accordingly should an attack occur. It can save your business tens of thousands of dollars and help ensure that your reputation remains intact despite the loss.
Cyber liability insurance covers several key areas that general liability insurance does not. General liability insurance is designed to protect your business from losses associated with property damage or personal injuries that are linked to your products or services.
Here are a few of the key areas that are covered by most cyber insurance plans:
Since 2002, all 50 states have enforced some form of data breach notification law. These laws require all companies to notify their customers if they have been involved in a data breach. Data breach laws help incentivize companies to place an emphasis on cybersecurity while ensuring customers have enough time to make an appropriate response to the exposure of their information. Notifying all of your customers of a data breach that involves PII can be a very expensive and time-consuming procedure. Cyber insurance can help cover the costs associated with getting this important information to the customers.
It’s not uncommon for digital or physical computer systems to be damaged during the process of a cyber attack. Much like notifying customers, repairing these systems can be expensive. Having an insurance policy that pays for some or all of these repairs can make a significant difference. The savings can easily be enough to keep your business afloat during the difficult months that follow.
A ransomware attack involves a hacker or malicious group that threatens to release sensitive data to the public if not paid a specific amount. Or, instead of publishing PII, they may threaten to encrypt sections of data on your system, thus rendering it inaccessible and useless. Both of these scenarios can be disastrous for a small business. Law enforcement agencies often warn against paying these hackers to avoid the outcome, but in some cases, it is the only way to avoid serious fallout.
A cyber insurance provider can help analyze the situation and choose an appropriate response. If the best solution is to pay the hackers to preserve the data, then the insurance policy may cover the cost of the attack. This will vary according to specific details that are unique in each ransomware attack.
A cyber attack may leave a network inactive for a period of time. If your business has a strong digital component, then a network outage can quickly become a major expense. A comprehensive cyber liability insurance plan will provide some form of reimbursement to cover lost income during this outage.
There will almost always be a variety of legal fees and regulatory fines involved after a cyber attack. If the PII of numerous customers was stolen, then those customers may seek legal recourse against your business. You will then have to pay for legal services to defend your business and to pay any fines that the court demands. A cyber insurance plan will help cover these expenses so that your business can continue to function and rebuild.
Does Everyone Need Cyber Liability Insurance?
Not every business requires cyber insurance, but most do. If your business stores the PII or personal health information (PHI) of customers, then having cyber insurance is highly recommended. Likewise, if your business operates primarily online or involves the transmission of data on a regular basis, then this type of insurance can help protect you from significant losses.
Cyber criminals are growing more sophisticated every day. It’s impossible to protect your business from each and every digital threat that currently exists. However, you can protect your business from the massive financial losses that follow a cyber attack. That’s what our cyber liability insurance is designed for.
We’re here to help with all your insurance needs.