As a business owner, you should know the answer to the question, “what is cyber insurance, and why do I need it?” Find out what to look for in cyber insurance coverage.
What is Cyber Liability Insurance?
Cyber Insurance was once a niche offering but is now a critical tool for risk management. Cyber liability insurance, also known as cyber insurance, protects against the financial risks of doing business online and storing or processing sensitive information like names, addresses, Social Security numbers, medical records, or credit card information.
Cyberattacks and security breaches can result in severe business disruptions and financial hurdles. A cyber liability insurance plan should cover the expenses you incur directly as a result of a cyber incident, such as:
- Hiring experts to investigate the incident and assist in compliance issues
- Contacting customers affected by a breach
- Crisis management and public relations needs
- Adding extra staff, equipment rentals, and third-party services
- Credit monitoring and identity restoration services
- Liability and legal defense fees
Why Is Cyber Insurance Important?
Many business owners do not realize that insurance companies’ general policies do not cover business interruptions from a cyber event. Having cybersecurity insurance can minimize business disruptions and potentially cover the costs of recovering from a network security incident. Security breaches are costly to remedy. The highly publicized data breach of credit monitoring company Equifax has cost them nearly $2 billion.
Technology and data drive the modern business world. With the digital landscape evolving so quickly, it can be challenging to protect your business from cyberattacks. External threats, like viruses, and internal threats, such as an employee stealing customer information, compromise your network.
Cyber thieves don’t care if you are a small business or a giant corporation. If they can access your sensitive data, they will target you. Your business functions could be brought to a screeching halt by a security breach. According to reports, the average cost of a data breach is $3.9 million. Not many small- or medium-sized businesses can survive that kind of financial hit. The cost of network attacks highlights the importance of cyber liability.
Do You Know What to Look for in Cyber Insurance Coverage?
Cyber liability insurance should cover losses caused by data breaches, ransomware attacks, and other cyber events. An effective cyber insurance policy should include both first- and third-party coverage.
First-party coverage covers the expenses your firm incurs after a network event, such as a hack of client information. Third-party coverage applies to claims made against your firm by those affected by a security incident. These lawsuits are very costly. Yahoo recently settled for over $117 million.
Along with the hefty price tag associated with first- and third-party claims, cyber liability insurance offers coverage to help protect your business from the out-of-pocket expenses of:
- Legal fees
- Computer forensics costs
- Government or industrial fines and penalties
- Compliance audits
- Required customer notifications
- Third-party damage
- Revenue loss
- Data restoration
- Brand management
- Credit monitoring and identity restoration
- Call center support
- Hardware replacement
It is important to note that when you sign a cyber insurance policy, you are required to maintain specific security measures. If you are negligent in your duties of preventing a cyber incident, your insurance provider may deny your claims. Understanding your policy’s terms is critical in protecting yourself from the hardships experienced by not taking preventative measures.
What Does Cyber Liability Insurance Not Cover?
Cyber insurance is a very focused coverage plan. These plans will not cover instances like:
Property damage or bodily injury
- Loss of property
- Criminal activity
- Social engineering
- Other policy options usually cover these types of claims.
InSource Insurance Group
Cyber liability is a highly specialized insurance product that requires detailed knowledge to ensure your business is appropriately covered. Trust the experienced professionals at InSource with all your cyber insurance needs. The risks of modern technology can affect any business. To protect your future, contact us today.
