Why Cyber Liability Insurance is So Important

In today’s fast-paced and technologically advanced world, cyber-security threats are a very real and ever-present risk to businesses both large and small.

Cyber hackers do not discriminate.

Sadly, any organization that uses technology is open to an attack. In fact, around 43% of cyber-attacks are carried out against small businesses, meaning the odds of being attacked are close to 50/50 no matter if you’re a small mom and pop startup, or a multi-national corporation.

In light of this, businesses are seeking out cyber insurance as a way to mitigate risks and prevent losses from damages caused by hacks, data theft, ransomware, service outages and more.

Those that don’t opt for insurance run the risk of massive costs to remedy the situation, often including legal bills, mandated credit monitoring for customers, loss of reputation and trust, and more.

Those that can weather the storm face an uphill battle, while over 60% of small businesses are forced to close their doors within six months of an attack.

What is Cyber Liability Insurance?

Cyber liability insurance protects businesses by mitigating risk exposure and costs associated with recovery from a cyber-attack or cybersecurity breach. All businesses today need to have cyber liability coverage in the event of a data breach where customers’ personal information, including social security numbers, health records, account information, and credit card information, has been exposed or infiltrated and stolen by a hacker.

Why Businesses Need Cyber Liability Insurance

It’s important for businesses to have cyber liability insurance in the event of a cybersecurity breach because fees and damages escalate quickly. In the event of a cyber-attack, cyber liability insurance pays for:
  • Credit Monitoring – Cyber insurance pays for the victims’ insurance and will set them up with the top-notch credit monitoring companies.
  • Computer Forensics – Computer forensics specialists who work under the direction of attorneys do not come cheap. Computer forensics specialists will determine if a data breach occurred, instruct businesses on ways they can contain damage and prevent future attacks, and investigate the cause of the breach. Your cyber liability insurance will cover the cost of these much-needed professionals.
  • Notification Costs – The costs incurred by businesses to notify and identify potential victims is steep. Companies who are the victims of a cyber-attack have a responsibility to investigate the crime as well as provide notification to customers of the security breach.
  • Civil Damages – Most liability lawsuits are class action suits. For those who do not know, class action suits can run tens of thousands of dollars. While most larger companies may be able to afford these costs, smaller businesses will not. Therefore, regardless of the size of the company, all business owners need cyber liability insurance.
Cyber liability insurance companies defend their policyholders from liability lawsuits and other forms of legal action. In addition, cyber liability policies give business owners the resources needed for them to create stout, economical data encryption and security practices.

What’s Covered By Cyber Liability Insurance

Cyber liability insurance covers a business’ liability for a cyber-attack that steals their customers’ personal information such as names, addresses, social security numbers, credit card information, etc. Policies can also provide coverage for legal fees, credit monitoring, data loss, extortion, and restoration. More specifically, claims that are covered are:
  • Data loss
  • Cyber extortion
  • Computer fraud
  • Loss of transferred funds
  • Business interruption
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Even though companies and professionals cannot prevent a negligence claim from being filed, they can still arm themselves with Errors and Omissions Insurance to help offset financial costs and defense expenses from costly lawsuits brought down on them by disgruntled clients. For more information about Errors and Omissions Insurance and what it can do to protect your business and livelihood, contact the reputable agents at Hightower Risk in Jacksonville, Florida today.

Types of Cyber Liability Insurance

There are three main types of cyber liability insurance coverage. They are Cyber Security, Cyber Liability, and Technology Errors and Omissions Insurance. While the first two types relate to data breaches, the third is more applicable to companies that provide technology-related products and services.

Cyber Liability: Also called Information Security and Privacy Insurance, this type covers the insured’s liability for damages due to a data breach. This insurance is ideal for businesses that directly sell products and services over the internet. It also protects businesses that collect data in its internal electronic network.

Cyber Security: This insurance type is commonly known as Privacy Notification and Crisis Management Expense Insurance. It offers coverage for first-party damage to both you and your business. This type of cyber liability insurance will cover the immediate response costs that are associated with a data breach. This insurance is optimal for businesses to have because in most cases, the law requires businesses to investigate the data breach, notify all who are affected, and provide one year’s worth of credit monitoring services.

Technology Errors and Omissions Insurance: This form of liability coverage, also called Professional Liability or E&O, offers protection for businesses that sell or provide technology products and services. This type of coverage protects businesses from taking on all legal defense costs incurred from a negligence claim made by a client, as well as any damages awarded in a civil lawsuit.

The Future of Business Insurance

With all the advancements in technology and the recent influx of cybersecurity breaches, cyber liability insurance is not going away anytime soon. As technology grows stronger, so will the risks of cybersecurity attacks and breaches. In fact, cyber liability insurance is poised to become a regular offering among the options for business insurance policies. To find out more about cyber liability insurance and how it can fit your business’s needs, contact the expert agents at Hightower Risk in Jacksonville, Florida today.

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