Cyber Liability Insurance + Your Business
Any business can be a target of cyber criminals.
Cybercrime has been on the rise over the last decade. According to BeyondIdentity.com, there were over 4.7 million reported incidents of cybercrime in 2020, which is 3x the number of incidents reported in 2010!
What is a “cyber incident”?
According to the Department of Homeland Security,
“A cyber incident is an event that could jeopardize the confidentiality, integrity, or availability of digital information or information systems.”
What are some examples of cyber incidents?
Consider 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.
What businesses experience cyber attacks?
Any business can be the target of a cyber attack. While many people think hackers only look to steal data from bigger organizations such as banks and credit card companies, about 50% of cyberattacks target small businesses.
“On average, an employee of a small business with less than 100 employees will experience 350% more social engineering attacks than an employee of a larger enterprise,” according to a 2021 study conducted by Barracuda Networks and shared by Forbes.
Why are small businesses so vulnerable to cyberattacks?
- Small business owners are less likely to have a strong defense against hackers. Many do not have the resources to invest in cybersecurity or provide adequate training.
- Small businesses often accept credit cards, store customer information on their computers, and conduct business online or in the cloud.
About 68% of small businesses report experiencing a cyberattack each year.
What happens in the aftermath of a cyber incident?
Recovering from a cyber incident is difficult for any business — and expensive!
Here are some costs a business can encounter following a cyber incident:
- There are federal and state laws in place to regulate cybersecurity standards in order to protect consumers. If a breach occurs and a business has not followed these guidelines, the business can face fines.
- Many businesses must provide free credit monitoring services to affected customers after the attack.
- Businesses may want to offer product discounts or promotions as a goodwill gesture to regain customers’ loyalty and trust.
- In response to an incident, businesses may need to update security software and provide additional training to personnel.
Cyber liability insurance can help!
What is cyber liability insurance, and how can it help my business?
Businesses of all sizes should consider cyber liability coverage.
Cyber liability insurance is designed to protect businesses from some of the most common security problems encountered with online and computer-related technology.
Unlike traditional thefts of tangible goods, 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 personal identification information (address, phone number, etc.).
What support does cyber liability insurance provide?
Business owners should consider how much risk they can afford, what coverages are available, and what incidents and information are included. Policies are available for many prices and ultimately represent only a small portion of the business’s overall insurance costs.
Cyber liability insurance may include:
- Access to legal counsel services. These professionals can provide tips on data security, legal advice, and help lessen the risk of civil litigation and other penalties if a loss does occur.
- An expert “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.
- Public relations/advertising support
- Call center and website support
- 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.
How can I get cyber liability coverage for my business?
Ready to discuss the cyber liability insurance needs of your business? Use Merchants’ Find an Agent tool to locate an independent insurance agent near you!
This blog was originally published on April 20, 2018.