Cyber Insurance: Why Your Business Needs It

March 22, 2018 3 min read

Cyber Insurance: Why Your Business Needs It

Cyber attacks and data breaches are most common among businesses that have less than 100 employees. 6 out of 10 cyber attacks are targeted to small and mid-sized companies. 60% of these companies that are victims to a cyber attack end up going under within the next 6 months. Small businesses are a common target for cyber crime because they usually don’t have proper cyber security and proper security procedures in place. According to one report, after a data breach, the average loss for a small business is $86,000.

With this being said, it is vital for small business to have cyber liability insurance.

What is cyber liability insurance?

Cyber liability insurance is an insurance policy that protects and covers your company and all third parties involved with any data breach or potential online risks. This type of policy covers online privacy issues, intellectual property infringement, viruses, or any other issue that could be cause through the internet. After a company has experience a security breach, cyber insurance usually covers legal fees, fines, loss of sales due to breach, customer notification, and more.

Cyber Liability Insurance can cover:

  • Liability for security/privacy breach
  • Liability for copyright infringement, reputation damage to company or third party, and slander
  • Expenses related to business interruption and loss of business related to the breach
  • Expenses related to blackmailing and cyber terrorism
  • Expenses related to customer notification, customer support, credit monitoring for customers, and any other additional expense for customers that have been affected

Who needs cyber insurance?

Your company need cyber insurance if you handle:

  • Customer payments or bank account information
  • Customer’s social security number or driver’s license
  • Customer’s name, contact information, and address
  • Customer’s medical information

Every company who is handling third party information should have cyber insurance. Even if you are B2B and only hold vendor information, it is even more important to have cyber insurance. Any third-party information you hold makes you liable for anything that is breached through your company’s website or system.

Having cyber insurance that not only covers your company, but also having third-party coverage is a smart and practical idea when handling consumer’s information or B2B information. Third-party coverage can help with legal expenses from consumers trying to sue you or receive more compensation from the breach. Even if you have a third-party company handling all your customer’s information and they have a breach, the liability falls on you and you are deemed responsible to pay the expenses for your customers.

With or without cyber liability insurance, your company is completely responsible for all data breaches and the expenses that come with it.

It is highly recommended for healthcare organizations, accountants, lawyers, financial companies, and retailers to have cyber insurance. These types of companies hold the most information on clients and consumers. Therefor, they are big targets for cybercrime.

Does general business liability insurance cover cyber insurance?

The answer is no. Business liability insurance does not cover cyber liability. With online and digital communications policies continuously changing, insurance companies won’t bundle general business liability with cyber liability. You are always able to get multiple policies with one insurance company and most likely it will be at a discount.

 

For more tips on cyber security for small business, click here.

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Amanda Fitzjerrells
Amanda Fitzjerrells


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