Insurance coverage that protects small businesses from cyberattacks goes by many names: Cyber Insurance, Cyber Security Insurance, Cyber Liability Insurance, Cyber Risk Insurance, Cyber Attack Insurance, Cyber and Data Insurance, and the list continues. But what exactly is Cyber Liability Insurance, what does it cover, and does your business need it? This article will address these questions, giving you a foundation of understanding to move forward with securing coverage.
Cyber Liability Insurance Explained
If there’s one thing we’ve learned from the pandemic with so many employees working remotely, no business is safe from a cyberattack. The chances of a cyber breach are currently 1 in 4. That’s a staggering number indicating that companies need to take this risk seriously. Coverage is especially critical if your organization handles sensitive data.
Retailers, healthcare organizations, and financial service providers are often targeted, but no business is off-limits to hackers. If you handle any of the following sensitive data, Cyber Liability Insurance is a must:
- Credit card or banking information
- Medical information
- Social Security or driver license numbers
- Customer names, email addresses, phone numbers, and addresses
Nowadays, it’s not a question of if your business will suffer a breach, but when. Cyber Liability Insurance provides organizations with a combination of coverage options helping protect you from cyber security breaches and other issues.
What is Covered by Cyber Liability Insurance?
There’s considerable confusion regarding what the various policies cover, including added available endorsements. You need to look for these critical elements to cyber liability coverage in your Cyber Liability Policy.
- Forensic Expenses cover hiring an outside forensic team for investigation when your data has been compromised.
- Legal Expenses covers legal representation to determine the scope of federal and state notification breach requirements, as well as counsel to defend you in the event of a lawsuit.
- Notification Expenses cover the expenses required for notification purposes, including postage, paper, printing, call centers, etc.
- Regulatory Fines and Penalties cover any fines and penalties that the government will assess.
- Credit Monitoring and ID Theft Repair is not legally required but does reduce potential legal liability when offered to affected parties.
- Public Relations Expenses covers expenses related to media exposure to restore your reputation and keep your clients, vendors, business partners, and patients.
- Liability and Defense Costs cover legal representation when a class action lawsuit is filed against you following a breach.
Some coverage for all of these components is included in most policies. Determining the limits, deductibles, coverage triggers, and scope of coverage depends on your business needs and should be discussed with your insurance agent.
What Isn’t Covered?
As with any insurance policy, there may be gaps in coverage. Generally, Cyber Liability Insurance policies do not cover:
- Potential future lost profits caused by a breach
- Loss of value due to the theft of intellectual property
- The cost to improve your internal technology systems after a cyberattack, including any software or security upgrades
Do You Need Cyber Liability Insurance?
According to Inc. Magazine, 60% of small businesses fail within six months of a cyberattack. Cyber Liability Insurance stacks the odds in your favor by mitigating the risks associated with cyber breaches. So, the long and short of it is, unless your business handles no sensitive information, yes, you do need it.
Insurance Alone is Not a Sufficient Defense
Just because you have homeowners insurance, you would not leave all of your doors and windows unlocked while on vacation. The same goes for defending your company against hackers. Developing a Cybersecurity Compliance Framework, educating your staff on preventing cybersecurity risks, and implementing various security software should also be part of your defensive arsenal.
Need help developing and implementing your security protocols? FUSE3 is here for you. We manage your security and disaster recovery planning to keep your business running smoothly so you can focus on what you do best!