Nowadays, it’s common to see alarming stories about large multinational companies falling victim to cyber-attacks. That leads many to think that only the “big boys” need cyber insurance. Unfortunately, this isn’t true. Small-business owners can’t simply sit back and relax assuming that cyber-security isn’t a thing they should worry about. Every business, small or large, that uses email, holds customer data, takes online payments or even those who just have a website, could be at risk. Simply said, the size of your business doesn’t matter when it comes to being a target for cyber-attacks.
But the great news is that there are ways you can protect your business from cyber-attacks. One of them is opting for a cyber security insurance policy. What is cyber liability insurance, you may ask? It is an insurance that covers a business’ liability for data breaches, including the loss of personal and financial information, such as names, birth dates, account numbers, social insurance numbers, etc. In other words, cyber insurance is used to guard your business against these internet threats, helping you to recover any costs suffered if the worst is to happen.
What Does Cyber Insurance Cover?
While there are different types of cyber insurance, most policies will cover:
- Investigative costs related to the data breach
- Legal fees and court costs
- Mandatory customer notification requirements
- The cost to repair and restore compromised software and systems
- The cost to recover data
While most businesses have a general liability policy coverage, cyber insurance is usually excluded. This means your typical business insurance isn’t always enough and you will need to sign up for an additional cyber risk insurance policy.
But still. it’s important that you understand that Just as a home insurance can’t prevent a fire from happening, cyber insurance doesn’t make a cyber-crime impossible. However, a cyber security insurance policy does ensure that your business remains financially secure in the event a breach occurs.
What Does Cyber Insurance Not Cover?
Cyber liability insurance commonly excludes the following:
- Property damage or bodily injury claims
- Loss of property, like a phone or computer
- Criminal activity, such as fraud, robbery, employee theft, or other crimes
- Social engineering – victimizing people into transferring company funds
Make sure to carefully read through your cyber liability insurance policy and understand any exclusions.
How to Choose a Cyber Insurance Policy?
Now that you’ve decided that you need cyber insurance to protect what you’ve worked so hard to build, it’s time to learn what to look for as a cyber insurance buyer. Just like with other types of insurance, there is no one-size-fits-all policy. For example, if you work in the healthcare industry, you may need greater privacy insurance coverage than other types of businesses. If you are in the technology sector, you may need cyber coverage that protects against data loss caused by third party cloud, software or IT providers.
When it comes to finding the best cyber security insurance for your business, it’s recommended to work with an insurance agent or with an insurance broker. Working with an insurance agent may limit your choices as the agent will most likely only offer coverage from one insurer. This is why business owners generally choose to search for insurance through an insurance broker. An insurance broker will have different carrier partners, which means you can get a quote from different cyber insurance companies. You will also have the option to mix and match insurance to get the coverage you need to have peace of mind.
How Much Does Cyber Liability Insurance Cost?
The cost of cyber liability insurance is often higher than other types of business insurance. This is because the fallout can often be much worse compared to most business threats. But considering the fact that you need to be able to deal with public relations damage, fix damaged hardware or software and recover lost profits and cover the cost of any legal claims, having cyber insurance is totally worth the cost.
Extra Steps You Can Take to Reduce Your Risk
While you absolutely need cyber insurance (as it could potentially save your business), the best defense against cyber criminals is to boost your security. You may even be able to arrange for a lower premium by showing your insurer documentation of risk mitigation, such as a disaster recovery plan. Here is what you can do.
Create a data breach response plan – The first hours and days following a network security failure are very important to ensure your business remains operational, both short and long term.
Conduct regular risk assessments and reviews, and then update your breach response plan if needed.
Use effective practices for safeguarding data – Decide which employees have access to sensitive data. In many cases, risks can be eliminated by restricting employee access to network or computer systems. Consider also taking extra steps to secure your passwords like for example, creating passwords that are complex and long enough to resist hacking attempts.