Cyber Liability Insurance
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What is cyber liability insurance?
Cyber Liability Insurance
Cyber liability insurance can offer a broad range of coverage to help protect your small business from various technology-related risks, like a data breach or viral software attacks.
Why you need cyber liability insurance
As businesses become more reliant on digital communication and data storage, criminals are getting more creative with cyber crimes. In fact, recent headlines are filled with examples of hackers targeting personally identifiable or health information from both small and large businesses.
It’s more important now than ever before to protect your business with data breach or cyber liability insurance. This form of coverage can help your small business respond quickly after a data breach or cyberattack. These coverages can help if:
- Business computers get a virus that exposes private, sensitive information.
- Customers after your business sensitive data.
- The business is exposed to customer damages and possibly public relations costs and business reputation damages.
Does your company handle sensitive information?
Maybe you’re not sure if your business is at risk for a cyberattack. Are you?
Typically, hackers target businesses that handle personal or financial data, like retailers, healthcare operations, and financial services providers. Ask yourself these questions to see if your business needs cyber liability insurance:
- Does my business collect, store, personal, financial, or healthcare information on clients or customers?
- Are the data or information security rules for my business industry, such as healthcare, education, or finance?
- Do we currently have a plan or protection for a cyberattack?
Still not sure. Frankly, any business that handles personal information, credit card, or financial data on their customers is a target for a cyberattack.
Cyber liability is for you if:
- Credit card, banking, or investment account information
- You store client data
- You store customer medical data
- Customer identification data
- Personal customer identification data
- Your business uses the internet
What does cyber liability insurance cover?
Cyber insurance covers a variety of small business risks that are divided into two parts:
First-party coverage – Covers damages that you and your business suffer because of a data breach. This can include things like investigative services, business interruption coverage, and data recovery.
Third-party coverage – Covers damages if your customers or partners are affected by a cyber-attack on your business. This can include legal fees, settlement costs, security failure, and media liabilities.
How much coverage you need depends on your business’s specific risk. Smaller cyber risk policies can usually be added to a business owner’s policy (BOP). Many businesses need higher limits than what’s available on a typical stand-alone policy.
How much does a cyber liability policy cost?
Cyber liability insurance premiums will depend on the coverage amount and your business’s exposure to cyber risk. For example, an online retailer requiring $3 Million in coverage will likely pay more than a small accounting firm that wants $250,000 in coverage.
Other factors that can affect the cost you may pay include:
- Network security
- Business risk classification
- Claims history
Will a cyber attack happen to you?
Maybe. Most of the headlines focus on large, corporate data breaches. However, small business is a large percentage of cybercrime victims. In 2021, Verizon reported that 28% of all data breaches happened to small businesses. So, it’s fair to assume that all business owners need to be prepared.
How can you be prepared? The first way is to understand how and why data breaches or cyber-attacks happen. According to Verizon:
- Attacks typically come from outside your business
- They are financially motivated
- Online, web apps are most frequently used
- Ransomware is a common tactic
While cyber-attacks are on the rise, most businesses still don’t add cyber liability insurance as part of their protection plan.
If your business stores any form of personal or financial data client or customer data, it may be time to discuss this protection with an insurance agent.
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