Tag Archive for: cyber insurance

Everything You Need to Know About Cyber Liability Insurance for Small Businesses

Cyber liability insurance for small businesses is essential. Why? It safeguards you from the high costs of hacking, cyberattack, theft, or a breach on your systems. With these incidents occurring more today than ever before, businesses of all sizes need to protect themselves from the significant repercussions of cybercrime.

A recent survey conducted by the Small Business Administration found that 88% of all owners of small businesses thought they were vulnerable to a cyberattack. If you are worried, there’s hope. Here are the ways that cyber liability insurance can protect you.

Ransomware

There are a few different ways that your small business could be affected by a cyberattack. Perhaps the most well-known is known as cyber extortion. In this case, cybercriminals use specialized software called ransomware. Once they have broken into your system, they install ransomware which locks you completely out of the systems on which your business relies. Then, they demand a ransom payment to “unlock” your systems.

Data Breach

Small businesses are a particularly high target for another kind of cyberattack known as a data breach. These situations happen when cyber criminals break into your systems with the intent to steal information that you have stored. In many cases, this will be the personal and financial information of your customers, such as credit card numbers, names, addresses, and Social Security numbers.

Direct Attack

The third type of cyberattack is a direct computer attack. In this situation, cybercriminals will hack into your system and cause damage that disables you from operating on your computer. In this case, the data you stored on these computers may be lost for good.

The Cost of Cyberattacks

The cost of any type of cyberattack can be significant. According to a 2021 report conducted by Hiscox, the average cost of a cyberattack on a business that has less than 250 employees was $25,600.

Expenses here include either hiring an outside IT security team — or paying your internal team extra — to recover lost identities and data, figuring out where the vulnerability was and fixing it, and restoring and/or replacing the equipment that was damaged. And that’s only the beginning.

If the data of your customers and business partners was compromised as a result of a cyberattack, you’ll have additional financial losses. Damages could include notifying customers of the breach, legal fees, settlement costs if you’re subjected to a lawsuit, and paying for free credit monitoring for those affected

You may also need to hire an expert public relations firm to help you mitigate the damage to your business’ reputation following the cyberattack. Maintaining trust in customers and business partners is essential going forward following a cyberattack, and a good PR strategy is key.

Keep in mind that all of the above doesn’t factor in the lost revenue you could experience due to your systems being down, or any regulatory fines you may incur if you were found incompliant with certain security regulations.

What Cyber Liability Insurance Does and Doesn’t Cover

Most cyber liability insurance policies cover all of the incidents listed above. There are a few exceptions, of course, depending on what the expense is or what the situation is.

For example, if the cyberattack was determined to be an intentional act of fraud conducted by your employees or you, then it will likely not be covered under the policy. You’ll also not likely be covered if you had prior knowledge of the cyberattack before you signed up for the policy.

Most cyber liability insurance policies won’t provide coverage for any business interruption that occurred due to a cyberattack on a third-party system. For example, if an outside provider of an essential system is attacked, and you lose revenue because of it, you likely won’t be covered under this policy.

And while cyber liability insurance typically provides legal coverage in civil proceedings, it doesn’t for criminal ones. In other words, if any criminal proceedings are brought against you or your company, cyber liability insurance typically does not provide coverage.

How Much Cyber Liability Insurance Costs

Like all insurance plans, the cost of cyber liability insurance varies greatly depending on the amount of coverage you need. For instance, the policy for a very large company will be drastically more expensive than one for a smaller business.

That being said, Insureon reports that the median cost for small businesses is $140 per month. Considering that it covers you from surprise cyberattacks and associated fees, the cost is well worth the peace of mind.

Remember that this is only a general idea, as you’ll need to speak with your insurance company to figure out a policy and premium that works for you.

When considering the amount of cyber liability insurance you need, consider the potential cost of a cyberattack on your company. If you collect, receive, send, or store personal health information and other identifiable information, then your cost will be higher. Costs would also be higher if you’re in an industry with specific rules regarding data storage, such as finance, health care, or education.

Find the Plan That’s Right for Your Small Business

We hope you found this guide to cyber liability insurance for small businesses helpful! Remember, an experienced agent can guide you through the process of figuring out what the appropriate level of cyber liability insurance for your small business would be. If you have any other questions, contact our team at GLIA today to ensure that your business is protected in the case of a cyberattack.

Cyber Insurance & What You Need to Know

Businesses today can unfortunately face threats every day. While the internet is essential for day-to-day business in just about every company in every industry, it’s also a source of potential loss.

Cybercriminals are always on the lookout for ways they can target businesses to compromise the data they hold on their systems to exploit the valuable information contained therein. One way businesses can protect against any losses they suffer as a result of data breaches is cyber insurance. Read on to learn more about cyber insurance and what it covers. If you have any other questions, feel free to contact our team!

 

What Is Cyber Insurance?

Cyber insurance is a type of insurance policy that covers businesses for the losses they suffer and the costs they incur as a result of a data breach in one of their systems. These events are typically not covered under a business’ general liability coverage since that coverage protects against any damage to property or injuries someone suffers due to the use of a company’s services, operations, or products.

Because cyber events aren’t covered under general liability insurance, businesses must purchase a separate plan that covers them in the unfortunate case that they suffer a data breach.

This is extremely important, as a 2021 threat report published by Thales Data found that 45% of all companies in the United States experienced a data breach within the previous year.

Data breaches are serious and can be expensive since most companies store vital personal information on their customers such as their account numbers, medical records, driver’s license numbers, Social Security numbers, credit card numbers, and contact information like addresses, emails, and phone numbers.

What Does Cyber Insurance Cover?

Cyber insurance coverage can be broken down into first and third-party coverage. The two categories cover both the effects a data breach has on your company (first-party) and the effects it has on your customers (third-party).

First-Party Cyber Insurance

When a data breach occurs, there are many ways that a company can experience loss. Most of these are related to network security.

Included under the umbrella of first-party coverage includes any costs related to IT forensics, data restoration, loss of funds, cyber extortion–such as payment to unlock ransomware–computer fraud, and any loss of revenue suffered as a result of a business interruption.

A lot of work goes into not only figuring out how a data breach occurred but on restoring any data and operations that were lost as a result of the breach. Then, once all that is solved, a company must figure out how they can set up new and better network security to make sure this doesn’t happen again in the future. All of that can be very expensive.

In addition, there can be a significant cost incurred for companies that have to fight a public relations storm as a result of the breach. This is especially true for bigger companies that hold lots of customer data on hand. Cyber insurance can help pay for the costs of all the physical network security as well as the public relations that go along with keeping face and instilling public confidence in the company.

Third-Party Cyber Insurance

There’s a lot more that goes into a data breach than just what happens to the company. Customers’ vital personal information could be susceptible during a breach, and the company may have many costs associated with that.

First, companies are required by law in most states to keep the personal information of their customers safe and secure when they are storing it. When a data breach occurs, companies have to notify their customers of the breach and the potential that this information was compromised.

There is a very serious cost associated with notification. Then, companies have to find a way to instill confidence in customers who may have many questions and concerns. Some companies start up a separate call center or customer service team to respond to these inquiries. Some offer free credit monitoring for a year to all customers whose information was potentially compromised. Again, these are expensive propositions.

There is also the possibility that a business may face liability from civil lawsuits if customers suffered a loss due to a data breach. Many of these cases are class action lawsuits that are brought, and the payouts could total into the hundreds of thousands of dollars very easily.

Cyber insurance covers the costs of the legal fees in this case and also helps with any settlement payment or judgment that is handed down.

Protect Your Business Today

Unfortunately, it’s a reality today that nearly every business in every industry is susceptible to a cyber attack. These cyber-attacks can have huge ramifications for every involved, including a company’s customers.

Data breaches can have long-term and huge financial implications for a business, and the entire process can be extremely expensive. Cyber insurance helps to provide coverage to a business in the unfortunate circumstance that they suffer a major data breach. If you have any questions on securing your data with Cyber Insurance, contact our team at GLIA today!