In today’s age, technology is a major part of our business operations: from conducting banking to running retail and e-commerce. As our reliance on technology grows, it’s becoming increasingly imperative that we’re aware of the importance of having cyber liability insurance as a failsafe in the event of a cyber attack or other cyber event. Barkly, a cybersecurity platform, notes that in 2017 61% of small businesses experienced a cyber attack, up from 55% in 2016, with the number growing each day. Most businesses, regardless of size, face digital threats and need protection against these risks.
So what is cyber liability insurance, exactly, and is it right for you and your business? Read below about cyber liability and why it might be an important part of your insurance portfolio.
What is Cyber Liability Insurance?
Cyber liability insurance (sometimes seen as “cyber risk insurance” or simply “cyber insurance”) is a form of blanket coverage that protects a business in case of financial loss from a cyber attack, such as a data breach and/or computer damage from malicious software. Cyber coverage is a specific type of insurance or add-on that protects against cyber risks, including data breaches, malware, and incident response. You can add cyber coverage to existing business insurance policies for enhanced protection. A cyber liability policy is a specialized insurance product designed to cover costs associated with data breaches, cyberattacks, and legal liabilities, and is especially important for high-risk businesses handling more sensitive data. Insurance providers set requirements and assess risk factors such as business size, industry, and cyber defense measures when offering cyber liability coverage.
What Does Cyber Liability Insurance Cover?
Generally, a cyber liability insurance policy covers your business if you experience a data breach, which can result in major fines, legal fees, and potential damage to your business and its reputation. A data breach can be defined as a breach or theft of an individual’s personal information, including Social Security or credit card numbers. Handling customer information such as credit card information and Social Security numbers increases your risk and can influence the cost and coverage needs of your policy. Personally identifiable information (PII) is a key factor in determining premiums, and businesses that handle more sensitive data or have more employees may face higher premiums and insurance costs.
Cyber insurance policy cover typically includes protection against internet-based threats, such as hacking, ransomware, and cybercrime, and provides specific protections beyond traditional insurance and commercial liability policies. Cyber insurance cover addresses a wide range of cyber risks, including digital threats that traditional commercial liability policies do not cover, such as data breaches, ransomware attacks, and cyber extortion. Cyber insurance coverage is a core component of cybersecurity risk management, helping businesses respond to incidents like data breaches, ransomware attacks, and network intrusions. Coverage options can be tailored to address different types of risks and costs, such as forensic investigations, business interruption, and legal expenses.
As with other policies, you can choose your amount of coverage, but usually, it also covers:
- Recovering data
- Recovering and restoring identities of affected customers
- Repairing damaged computer systems
- Notifying customers about the breach
- First-party coverage, which pays for losses directly incurred by your business, such as data restoration and notification costs
- Third-party coverage, which covers liabilities and legal costs arising from client-related data breaches or cyber incidents
- Third-party cyber coverage, which pays for legal costs and liability claims involving clients or third parties, is especially important for IT professionals and tech companies
- Incident response, providing immediate response actions and guidance after a breach
- Public relations costs, helping manage your company’s reputation and communication after a cyber event
- Legal costs, covering expenses for legal defense and settlements after a cyber incident
- Ransom payments, covering ransom demands during a ransomware attack
In the event of a data breach, most states are required to notify customers. This can be costly to your organization. Electing to have cyber liability insurance will assist with the necessary financial resources to comply with local and state law. Cyber insurance can also help with ransom payments if your business is targeted by a ransomware attack, and can provide more coverage for businesses facing higher risks or handling more sensitive data.
How Cyber Liability Insurance Can Benefit Your Company
Any business, whether a mom-and-pop store or a large corporation, that incorporates technology in its daily operations should elect to receive cyber insurance. This is especially important for large corporations that oversee personal and private information of a large consumer base. The amount of customer information, such as credit card details or Social Security numbers, you handle can impact your coverage needs and insurance costs. More employees can increase the likelihood of security breaches and claims, affecting your rates.
As technology becomes more advanced and is increasingly used for business operations, there are growing risks for data breaches and other cyber attacks. Each year, cyber attacks become more sophisticated and target more companies. Don’t fall prey to complicated cyber attacks that leave your company at risk of significant financial loss. Cyber defense measures, such as multi-factor authentication, are important for eligibility and can help lower your premiums. Errors and omissions insurance, or omissions insurance, can provide additional protection for professional liability related to cyber risks and service mistakes. Cyber liability insurance can also extend protection to your client’s business in case of legal actions or damages resulting from cybersecurity incidents.
Elect to receive cyber liability insurance and make sure you’re not blindsided by a cyber attack. They can strike at any time, often by accessing your systems through vulnerabilities. The cost of cyber insurance varies based on business size, industry, data handled, and coverage limits, with higher premiums for businesses in higher-risk industries or those handling more sensitive data. Understanding your cyber insurance cost and coverage options is essential for comprehensive protection.
Pepper, Johnstone & Company protects your family with a choice of multiple insurance agencies to choose from, for home, auto, and business. We’ve helped countless people save money on their insurance while making sure they’re properly covered. Visit us today at our website, or give us a call at 866-381-5821 to get us working on a quote for you today. You can also request a cyber liability insurance quote here.