Do I need Cyber insurance? 5 mins

Most likely, you do. As the number of applications, devices, etc. increases, an organization becomes more vulnerable to attacks. Just like businesses insure against business problems, natural disasters, and physical risks, they need insurance coverage for cyber risks as well.

If a costly breach occurs, your company may not have the resources on hand to combat these issues or recuperate losses. Cyber insurance can provide support, so these attacks do not cripple your business. If your business is on a small scale then it's a more likely target for hackers. Small businesses are more prone to attacks as they have less security against cyber attacks. According to the Verizon 2019 Data Breach Investigations Report, 43% of all cyberattacks and data breaches target small businesses.

More Stats related to Cybercrime

  • 85% Data breaches (hacking and social)-- Hackers' most favorite activity is to target a small business and as it's easy to figure out their email and client information due to weak cybersecurity. They send emails with links to be opened up by trusted clients demanding information and data.
  • 36% Data breaches (misuse of data) -- Negligence by an employee could lead to data displacement. It could be a small mistake like using a public network that is not secure or losing your laptop. Misplacing the data may lead to disclosure of important information for example credit card numbers, Email passwords, etc
  • 7% involved Ransomware--Blackmailers may block your network id, or data access unless you pay them a hefty amount of ransom. The cost of ransom may not be as high as the amount of data breached would cause to the respective person hence they pay off the blackmailer.

All these stats are rising up, because, with the growing technology, hacking and data breaching has become an easy way out. Unlike big established companies, small businesses are less likely to have poured time, money, and energy into state-of-the-art defenses. Only 10% use any data protection at all. And because they are also less likely to have Cyber insurance or extra cash to burn, they take a disproportionate financial hit too. Unfortunately, 60% of small businesses that experience an attack go out of business within six months. Businesses who can't afford cyber insurance can afford an add on which is designed for small businesses.

Business Owners Policy (BOP)

A folded form of cyber insurance is Business Owners' policy insurance. A BOP combines protection for all major property and liability risks in one insurance package. This type of policy assembles the basic coverages required by a business owner in one bundle. However, it is usually sold at a premium that is less than the total cost of the individual coverages.

BOP being a money-saving combo includes three types of coverage, especially recommended for small businesses

  1. Commercial General Liability,
  2. Property
  3. Business Interruption

You can add Cyber insurance as an add-on to this.

What does Cyber insurance cover?

FIRST-PARTY COVERAGE (covers your non-legal costs):

  • Investigation: A forensics investigation is necessary to determine what occurred, how to repair damage, and how to prevent the same type of breach from occurring in the future. Investigations may involve the services of a third-party security firm, as well as coordination with law enforcement and the FBI.
  • Business losses: A cyber insurance policy may include similar items that are covered by an errors & omissions policy (errors due to negligence and other reasons), as well as monetary losses experienced by network downtime, business interruption, data loss recovery, and costs involved in managing a crisis, which may involve repairing reputation damage. Reputation damage can be repaired by hiring officials in crisis management,  public relations, and advertising. These professionals repair the damaged reputation by building trust again with the clients.
  • Privacy and notification: This includes required data breach notifications to customers and other affected parties, which are mandated by law in many jurisdictions, and credit monitoring for customers whose information was or may have been breached
  • Damaged electronic data. Replacing or restoring data compromised by a breach.
  • Business income and extra expenses. Replacing income lost due to a breach and covering any new expenses that arise when getting your business back up and running.

THIRD-PARTY COVERAGE (pays others if you have legal costs):

  • Lawsuits and extortion: This includes legal expenses associated with the release of confidential information and intellectual property, legal settlements, and regulatory fines. This may also include the costs of cyber extortion, such as ransomware

HOW ELSE CAN YOU PROTECT YOURSELF FROM A CYBERATTACK?

Insurance companies provide small businesses with risk management training, in which they train employees to work efficiently and learn techniques to avoid any kind of data breached. The training may include techniques of creating a more secure network so that no hacker can approach it. Moreover, data encryption should be also used so in case of data breached, the data is of no use to the other person.

What to look for as a cyber insurance buyer?

While looking for cyber insurance, you should check that does your insurance policy covers all of the above areas

  • Does the insurance company offer one or more types of cyber insurance policies or is the coverage simply an extension to an existing policy?
  • What are the deductibles?
  • How do coverage and limits apply to both first and third parties?
  • Does the policy cover any attack to which an organization falls victim or only targeted attacks against that organization in particular?
  • Does the policy cover social engineering as well as network attacks?
  • ADDITIONAL RESOURCES YOU SHOULD CHECK OUT:
  • Risk Assessment Tool to see how vulnerable you may be to a cyberattack
  • Cost Calculator to estimate how much a data breach could cost you
  •  List of data breaches that may surprise you!

Want to check out your options for top-rated Cyber insurance ... which may include adding it to a money-saving Business Owner’s Policy (BOP)? Call our friendly, licensed agents for a custom consultation on the right coverage for you. Thanks to the Ponemon Institute, Verizon Data Breach Investigations Report, and Bank of America Merchant Services for all the great info.

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