Small businesses and companies are often targets of cybercriminals owing to the large amount of important information they store on their devices at work. According to a SBA survey, it was concluded that a total of 80% of small business owners are vulnerable to cyberattacks.
Recognizing this great challenge, cyber liability insurance can be an effective tool that enables small business owners to prevent data breaches from cyber criminals.
This article explains everything you need to know about cyber liability insurance—what it covers, its exclusions, types of cyberattacks, and other useful information. Ensure you read to the end, so you don’t miss out on the wealth of information we have curated for you.
What Is Cyber Liability Insurance?
Cyber liability insurance, also known as cyber security insurance, is a type of insurance designed for small business owners and companies that seek protection against cyber threats and data breaches.
If your business involves storing sensitive information that is valuable to your customers, then getting cyber liability insurance is a wise option.
Cyber liability insurance offers coverage in the event of damage that affects your business as a result of a cyberattack or security breach. There may be situations where your customer’s information is tampered with; cyber security insurance will cover any damage done.
Types of Cyber attacks
Cybercriminals use harmful devices and software to access the data stored on your system. Highlighted below are potential cyber-attacks:
- Cyber extortion.
- Data breaches.
- Computer attacks.
- Ransonware
- Phising
- Malware
What Does Cyber Liability Insurance Cover?
Generally, cyber liability insurance covers any form of harm caused to your business in the event of a data breach. This type of insurance caters for all expenses involved in data and identity recovery after a security breach. In addition to these, cyber liability insurance covers the following:
- Lost income resulting from network outages.
- Regulatory fines.
- Customer and employee lawsuit.
- Ransom payment made to gain access to the lost data.
- Public relations expenses for restoring your company’s reputation.
Furthermore, cyber liability insurance can also pay for damage that impacts your customers or business partners as a result of a cyber attack from an unknown source. Thus include coverage for legal fees, settlement costs, and customer notification.
What is Not Covered
While cyber liability insurance provides sufficient coverage to policyholders, there are some scenarios where it won’t be applicable. It is important to review your cyber liability coverage to get a better understanding of what it covers and its limitations. That being said, cyber security insurance will not cover:
- Intentional Acts: If a data breach occurs deliberately on your employee’s end, cyber security insurance will not cover it. Intentional acts include fraud, criminal conduct, and other lawful acts planned by your employees.
- Business Interruptions From Third Parties: Perhaps your business is interrupted by systems under the control of third parties; your policy may not cover it.
- Criminal Proceedings: Cyber liability coverage may not cover claims filed in the form of criminal proceedings.
- Prior Acts or Knowledge: Peradventure you were aware of the risk your data is exposed to and you overlooked it without taking preventive measures before your coverage started, cyber security insurance will not cover it.
In essence, it is important to understand the full scope of your policy so you are aware of the exclusions. Then, if you need more coverage, you can speak to your insurance provider on how to go about it.
Who Needs Cyber Liability Insurance?
If you own a small business or company that involves managing sensitive information about your customers, you should consider purchasing cyber liability coverage.
Typically, any business that stores and manages vital information such as name and address, medical records, social security number, and credit card information of customers will need cyber liability coverage. Outlined below are the categories of businesses that we recommend cyber security insurance for:
- Contractors
- Accountants
- Restaurants
- Reatilers
- Consultants
- Marketing agencies.
- Real estate agents.
- IT services.
Even if your business is not among the ones mentioned, but it requires managing sensitive information about your customers, getting cyber security insurance is a wise option.
How Much Does Cyber Liability Coverage Cost?
Well, the cost of getting cyber security insurance varies and is mostly dependent on the insurance provider and the type of coverage you want on your policy. Also, the cost of getting this type of insurance is based on several factors, such as:
- Network security.
- Company’s exposure to cyber risk.
- The amount of coverage your business or company needs.
- Revenue
- Claim history.
- The number of people who have access to your data and systems.
When purchasing cyber liability coverage, the most effective way to get the best rate is by shopping around and comparing quotes. By doing this, you will be able to make comparisons, weigh your options, and settle for the one that best suits your needs and budget.
FAQs
How much cyber liability insurance do I need?
Basically, the right amount of cyber liability coverage you need depends on the type of risks you are exposed to. The ideal thing to do is to evaluate the type of risk your business or company is exposed to. This would help you determine the amount of cyber liability insurance you need.
If you are still unclear about what to do, you can speak to an insurance agent, who will give you advice on the appropriate coverage your business needs.
What’s the difference between cyber liability insurance and data breach insurance?
Typically, cyber liability insurance is mostly for bigger businesses that require more cyber protection. This type of insurance offers protection to businesses in the event of cyberattacks.
On the other hand, data breach insurance provides security in a situation where sensitive data gets exposed in a data breach.
