Why Cyber Liability Insurance is So Important
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?
Why Businesses Need Cyber Liability Insurance
- 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.
What’s Covered By Cyber Liability Insurance
- Data loss
- Cyber extortion
- Computer fraud
- Loss of transferred funds
- Business interruption
Build your Life Raft Before the Flood
Types of Cyber Liability Insurance
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.