Cyber protection is a top priority in today’s global, technology-driven economy. A recent survey of global executives listed cyber threats as the fourth highest risk for organizations across industries ranging from healthcare to manufacturing. Cyber breaches expose businesses to disastrous situations, which can impact brand reputation, customer relationships, and even the survival of the exposed business. Because of the tremendous risk of a cyberattack or breach, cyber insurance coverage is a necessity in today’s business environment. Small businesses need to ensure they are creating digital resilience by transferring their cyber liability risk to the insurance market.
Data Beach Quick Facts
- The average cost of a small business data breach is $86,500
- 62% of all cyberattacks hit small- and mid-sized businesses
- 60% of hacked small businesses close shop within six months
- A 2017 report found 93% of cyber breach attacks were preventable
- The FBI reports more than 4,000 ransomware attacks occur daily, with 230,000 new malware samples produced every day
What is Cyber Liability Insurance?
Cyber liability insurance helps businesses recover from data breach events by covering certain related expenses and providing services to assist in the aftermath of a cyber breach. Cyber liability policies include first and third-party coverages, protecting both the business and customers who are adversely impacted by a data breach event.
First-party coverages can include loss or damage to electronic data, loss of income or extra expenses, and cyber extortion losses. Third-party coverages can include credit monitoring, legal defense related to a breach, and cost of responding to regulatory inquiries.
Without cyber liability insurance coverage, a small business could be stuck with fronting the bill for all costs related to a cyber breach event, a scenario which threatens the livelihood of businesses who do not possess the adequate capital to weather such cyber events.
Why is Cyber Liability Coverage So Important?
Cyber liability coverage is a necessity in today’s world to protect customers and businesses alike. Currently, many states already require companies to notify customers of a cyber breach, which can be a very expensive process. Furthermore, although post-breach services like credit monitoring are not required, they go a long way in recovering customer’s trust- which is an integral part of any business’ brand.
What Does Cyber Liability Insurance Cover?
Areas where cyber liability insurance can assist small businesses include:
- Legal fees and expenses related to a cyber data breach
- Customer notifications about a data breach
- Restore customers’ affected personal identities
- Recovery of compromised data
- Repair damaged computer systems
Who Needs Cyber Liability Insurance?
To combat the ever-growing threat of a security breach, every small business needs cyber liability coverage for their organization. If your business uses technology to store customer data, you are at risk of a breach. Small businesses are being targeted more than ever, and a cyber insurance policy provides the needed resources to recover after a cyber event occurs. Only business owners and leaders who proactively implement cybersecurity measures and proper insurance coverage can hope to stay digitally resilient in today’s tech-focused world.
In today’s digital landscape, data is worth its weight in gold. Companies of all sizes must ensure they are protecting their data and their customers’ data from external threats. One cyber breach is all it takes to cripple a small business. It is imperative as a business owner to make sure your business is adequately protected from all threats of doing business in a digital world. Make cyber insurance a business priority now before it is too late.
Cory Mangum, MBA, CPCU
Cory Mangum is not affiliated with Cetera Advisor Networks LLC.