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Do You Need Cyber Liability Insurance?

siadmin August 23, 2018 Insurance

Cyberattacks are scary occurrences that no business wants to be a part of. Unfortunately, they happen. There are a number of tools and resources available to protect businesses before a breach, but what happens if one occurs? Is there anything that can help businesses recoup the damages? There is, and it’s called cyber liability insurance.

What is Cyber Liability Insurance?

Cyber liability insurance prevents you from losing your business after a security breach. Sadly, 1 in 5 small businesses experiences a cybercrime each year, and of them, 60% will fold within six months, according to the National Cybersecurity Alliance. Why does this happen? Aside from a damaged reputation, security breaches are expensive. They suck up resources that small businesses don’t have, especially after an attack. These fees include:

  • Investigating the attack
  • Notifying your clients of the attack
  • Helping your clients protect themselves
  • Restoring compromised data
  • Downtime

Cyber insurance keeps your business running after a cyberattack. These situations are never pretty, but having insurance coverage will allow you to keep moving forward and recover from the breach. Plus, your employees and customers will appreciate you being on the ball and having the resources to bounce back.

Choosing the Best Cyber Insurance

Cyber liability insurance can be expensive, so it’s important to do your homework. Also, this type of insurance is newer and not heavily regulated, so policies can differ immensely. Here are a few things we recommend doing.

  • Determine your risk. If your business handles sensitive information (credit card info, paystubs, tax forms), risk will always exist. Assess your vulnerabilities and get a handle on them, such as by installing antivirus protection and encrypting hard drives. When this is complete, identify your risk and how much you can afford to pay for insurance.
  • Research policies. Like other types of insurance, you should shop around for multiple quotes for cyber insurance. This type of coverage isn’t cheap, but consider that the average cost of a security breach is $225 per person, according to the 2017 Cost of Data Breach Global Study. Always compare apples to apples to ensure you are getting the best coverage for the cost.
  • Apply for the best. When you find insurance companies that fit your needs and budget, apply for cyber insurance. Once you are approved, you can determine the best plan based on the deductible, premiums and coverage.

Aside from having cyber liability insurance, make sure that you are doing everything you can to protect a security breach. This includes having software to detect ransomware, email spoofing and spear-phishing. Also, be sure that your employees are properly trained in keeping information safe, as they’re often the weakest link.