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Any Business Can Be a Target of Cyber Criminals …And Cyber Liability Insurance Can Help!

By April 20, 2018January 14th, 2021No Comments

What is cyber liability insurance, and how can it help my business?

Cyber liability insurance is insurance coverage all businesses should have regardless of their size. From a “mom and pop, Main Street shop” to a doctor’s office or manufacturing facility, cyber liability insurance can provide the peace of mind to keep your business humming.

Unlike traditional thefts, where tangible goods are stolen, a cyber-attack involves criminals going after data, such as business information, and customers’ and employees’ personal information including credit card numbers, social security numbers and personally identifying information (address, phone number, etc.).  

A small business may think they’re “too small” to be the target of those insidious hackers on the dark web. Many people think hackers are looking to steal data from banks, credit card companies or health insurers, but that’s not always the case. Small businesses often accept credit cards, store customer information on their computers, and conduct business online or in the cloud. Small business owners are also less likely to have a strong defense against hackers. All of these facts mean a small business may be even more vulnerable to attack.

What is a “cyber incident”?

Cyber incidents may include the following scenarios:  

  • Employees save their data to a network, which puts the entire business at risk if a computer virus infects the system.
  • Customer information, including credit card information and bank account data, is stored on the computer. An employee steals the information to sell on the “dark” web, a portion of the World Wide Web that can only be accessed by means of special software, enabling users and operators to be anonymous or untraceable.
  • An unencrypted device such as a smart phone or laptop that contains personally identifiable information is lost or stolen.

In any of these cases, a cyber-criminal can damage a business by infiltrating networks, holding data hostage, or accessing sensitive information such as credit card numbers, passwords, addresses, and Social Security numbers.

The task of running the day-to-day operation of the business can be severely impacted when a business has to recover from an attack. Businesses have to consider federal and state laws that have been enacted to protect consumers. They must comply with regulations, knowing they could face fines if a breach occurs and they have not taken the necessary steps to try to protect their customers.

In addition to fines, there are other costs to consider. Many businesses must provide free credit monitoring services to affected customers for a specified period of time. Product discounts or promotions may be offered as a goodwill gesture to regain the loyalty and trust of a customer. Additional costs may be incurred to update security software and train personnel. In addition, there’s always the issue of reputation.

After considering all of this, a small business owner may think there’s nothing they can do, but they’re wrong! Cyber liability insurance is designed to assist a business in surviving a data breach or other cyber-attack.

What should I look for in cyber liability insurance?

A business owner should consider a number of facts before purchasing cyber liability coverage, including access to professionals who will provide tips on data security and who can provide legal advice on matters of applicable laws and regulations. These professionals can also help lessen the risk of civil litigation and other penalties if a loss does occur.

Policies are available for many prices and ultimately represent only a small portion of the business’s overall insurance costs. A business owner should consider how much risk they can afford, what types of coverage are available, and what types of incidents and information are included. Solid cyber insurance policies should also include a “breach coach”, an expert who can walk business owners through a cyber incident. The coach works with experts to investigate how and when the breach happened, what was accessed, and who was affected.

In addition, owners should look for coverage that includes public relations/advertising support, and reimbursement for expenses incurred for breach notification, call center and website support, and credit monitoring and identity theft restoration services.

Finally, business owners should realize that insurance will not prevent data breaches from occurring. Businesses must remember they have a duty to protect themselves with security software and a comprehensive overall plan to protect information.

Cyber liability insurance is one more piece of the puzzle in maintaining a successful, profitable business for years to come.

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Merchants Insurance Group

Merchants Insurance Group

Merchants Insurance Group sells its products through a network of more than 1,000 independent insurance agents in Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, and Vermont. We sell our products through independent insurance agents because we believe they provide value to policyholders through their broad range of products and their insurance expertise.