Cyber crime can cost US businesses up to $13 million to deal with, according to recent reports. For many businesses, particularly smaller organizations, it’s not possible to survive a financial hit of this size. The good news is that there’s a way to protect your business from going under after a cyber attack, and that’s by taking out appropriate insurance cover.
What is cyber liability insurance?
Cyber liability insurance protects you against losses resulting from a cyber attack. The insurance helps stop your business from sinking financially if hackers steal data or disrupt your internal systems.
Who needs cyber liability insurance?
The simple answer is that every business needs some form of cyber liability insurance. Instances of attempted security breaches have shot up by nearly 70% in recent years, and this statistic will only get higher. If you handle, store, or collect personal and financial data, including employee details, you’re a possible target.
Why cyber liability insurance is important
1: Standard liability insurance isn’t enough
Liability insurance doesn’t cover you against cybersecurity incidents. These standard policies are designed to protect against traditional risks, such as lost property and damage. They won’t pay out if you face a data breach.
2: Improves business relationships
If you take out a cyber liability insurance policy, it might help you facilitate business arrangements with other companies. For example, they may trust you to handle and process data for them or they may be willing to sell goods and services through your platform.
3: It supports your overall cybersecurity strategy
Every business needs an effective cybersecurity strategy. This should include training, software and hardware updates, and managed services providers. Cyber liability insurance naturally supports your overall cybersecurity goals.
4: It covers your initial cyber breach expenses
When you’re facing a cyber breach, the costs quickly add up. For small businesses, a breach can cost up to $86,000. These costs include repairing damaged software and hardware, notifying customers, downtime, and reputation damage control. A cyber liability insurance policy covers these outlays.
5: Coverage against civil claims
If you take out third party coverage, your insurer can cover the cost of lawsuits made by, for example, customers affected by a data breach. Coverage can also extend to the costs of slander and libel and regulatory fines.
6: You must devise proper security policies
Your insurance provider will typically expect you to uphold certain cybersecurity protocols and standards throughout your organization. For example, you’ll often be expected to use firewalls and install anti-malware programs. If you don’t implement these security measures, your insurer may deny any claims you later make.
7: Minimizing security risks
A reputable insurance provider doesn’t just cover you for cyber crime or data breaches. The insurer should help you reduce your cybersecurity risks overall so that you’re less likely to make an insurance claim.
Cyber insurance doesn’t cover everything
While cyber liability insurance is extremely important, it doesn’t cover every eventuality. For example, the average cyber liability insurance policy doesn’t cover:
- Social engineering or trickery
- Property loss or damage
- Personal injury
- Criminal activities such as robbery and employee theft
There are separate insurance policies and packages available that cover these scenarios, such as commercial crime insurance. Depending on the size and nature of your business, these extra policies may be worth investing in.
The reality is that it’s impossible to prevent every instance of cyber crime. However, cybersecurity should be a priority for businesses of any size. Cyber liability insurance cover gives you the peace of mind and financial support you need to keep your business afloat should the worst happen.