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.
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.
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.
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.