Cyber liability insurance is a relatively new offering that meets the needs of business by protecting them from cyber attacks.
Many business owners may wonder whether it’s worthwhile to buy it and whether it offers the protection they need. Let’s look at what it is and how it can protect your business.
What is Cyber Liability Insurance?
Cyber liability insurance coverage (CLIC) covers a broad range of risks. The term “cyber” describes processes, services and information/security-related tools that are at risk of being breached.
Policies cover expenses related to a data breach or privacy violation. These may include managing the incident, investigating how it happened, and measures to correct the problem. These measures might include contacting potential victims of the attack, legal fees, fines, and more.
Some policies also cover damages for website impairment or if a hacker copies your content. It may also protect your business from extortion and liability from third-parties affected by data theft or access denial.
Is Hacking A Real Threat?
Many businesses believe that cyberattacks are the exception, not the norm. However, statistics don’t bear this out. Cyberattacks have tripled since 2011 and experts estimate hackers create about 3.5 new threats against business every second.
Small businesses make up 31 percent of all attacks. These hacks affect their professional reputation and the integrity of their data. They also lead to network downtime and lost customers.
The 2015 Data Breach Investigations Report is an enlightening read. The most hacked industries are financial, public services and information services websites. Information service includes websites that sell anything from books and music, to hotel rooms, to internet hosting. In 60 percent of cases, hackers violate an organization within minutes.
Data breaches also take a very long time to resolve. Over 60 percent take months to rectify, and some even years. Data breaches cost companies an average of 3.5 million dollars to fix.
Doesn’t Our Existing Insurance Cover Hacking?
What many companies don’t realize is that even if they host or store their data in the cloud, they’re still legally responsible for protecting third-part data. Obviously, you can’t control how your host manages your data, but you can protect your business.
Some cyber liability insurance policies will also provide business interruption coverage so that you can maintain cash flow. This is important, because many hacks temporarily shut down companies, leaving them unable to do business at all. Few businesses have the capital to endure major cash flow interruptions.
Treat Data Like Dollars
Businesses rely on data for their core operations. Your business might collect it through point of sales software, online credit card purchases, or over the telephone. You collect names, email addresses and other sensitive data to stay in touch with customers and for seamless transactions.
Data provides a pipeline to connect with clients and to make sales. Unfortunately, phishing scams, identity theft, and telephone hacks are a growing threat and one you shouldn’t ignore.
Companies hold more customer and supplier data than ever before. These parties increasingly pursue businesses for compensation should you lose their information. Retailers also face severe penalties when they lose credit card data. Target paid a $10 million dollar settlement to disgruntled customers, $67 million to Visa, and $19 million to MasterCard. Merchant service agreements allow credit card companies compensation for forensic investigation costs, credit cared reissuance costs and fraud investigations.
Better Safe Than Breached
Cyber insurance can provide comprehensive coverage for a wide range of electronic perils that increasingly threaten businesses today. A breach costs time and money to resolve and it can severely damage your reputation.
Customers expect openness and transparency when hackers access their personal data. It takes communication and resources to satisfy their demands and it impairs your operations.
Give us a call to discuss your current insurance policies and to find out what types of cyber protection your business needs. If you do a significant portion of your business electronically, as most businesses do today, cyber liability insurance is a wise addition to protect your assets and reputation.