Protect Your Data: What Is Cyber Liability Insurance for Businesses?

Did you know a data breach costs $8.19 million on average? That’s why big companies also spend big dollar amounts on cybersecurity.

The healthcare sector, in particular, is the most popular target because hospitals store a lot of sensitive information about their customers (which they have a lot of). The financial industry is a close second, while the energy sector comes in third.

If you’re a small business in a modest industry, though, should you be afraid of this threat? Of course, you’re only risking the future of your business by not getting cyber liability insurance.

What is cyber liability insurance, and why do you need it? Keep on reading to learn more.

What is Cyber Liability Insurance

Cyber liability insurance provides coverage against cyber risks. It’s designed for malicious cyber-attacks, data breaches, and such.

Note that the cyber liability insurance definition doesn’t include protection against these cyber threats. It won’t prevent your system from getting hacked, nor would it recover any data you lost.

What it does is serve as a safety net should your business face these challenges. It ensures that the attack won’t cripple you and will give you a chance to rise again.

What It Usually Includes

Cyber liability insurance includes coverage for any losses incurred during a cyber event. It helps you recover from the attack by covering any expenses for recovering lost data, repairing computer systems and networks, and so on.

It should include loss of income and ancillary costs, such as credit monitoring for your customers. As this is going to be a big deal to the media, your policy will also cover your PR expenses.

These are the basic inclusions of first-party coverage. You might also want to get third-party coverage, though.

This coverage helps cover fines and legal fees. You should expect to face lawsuits resulting from the breach, especially if it affected customer and vendor data.

Why Do You Need Cyber Liability Insurance

Now we know what cyber liability insurance is, but do you need it? If you have electronic data in your business, then yes.

Even if you’re not in the tech industry, you still have valuable data that might get compromised. After all, every business has sensitive data they want to protect. It can be important information, like the customers’ names, addresses, contact numbers, and so on.

Some might store it in local hard drives, while others may use the cloud. While the latter provides more protection, both can still be vulnerable to attacks.

Still don’t think you need it? Below are some of the best reasons for getting one today.

To Cover All Your Bases

You may already have business policies, but they’re likely not going to cover cyber events. Under normal circumstances, you can get damage to your equipment covered. You might even regain the loss in profits you incurred because of physical events.

Without the proper coverage, however, you might not get a cent if these were because of a cyber-attack. If your policy has explicitly excluded cyber coverage, you don’t have a safety net anymore. Even small businesses become exposed to significant risk because of the reason below.

To Brace Yourself Against Cyber Crimes

Everyone, even tech-savvy individuals, can become a victim of cyber-crimes. There are plenty of threats on the internet, including malware, ransomware, and hacking.

Malware is malicious software designed to cause damage or get information. This is where computer viruses fall under, along with worms, trojans, and so on.

At best, malware can cause inconveniences, like redirecting you to advertisements. At worst, it can destroy your system or gain access to all your data.

Ransomware is also a form of malware that “kidnaps” your files. It encrypts the data so you can’t access them, and the only way to get them back is to pay a ransom.

Then, there’s also the threat of hackers whose sole purpose is to break into your system. Once they’re in, they can do anything they want, like steal information, destroy it, install dangerous malware, or even mess with your files – sometimes, without you even knowing.

All these threats can be crippling to businesses, but not if you have proper coverage. It can cover any payment you make due to ransomware, for instance, and any loss incurred while doing so.

To Account for Human Error

Firewalls, encryption, and such aren’t perfect as talented and dedicated hackers can always find a loophole. The best you can do is to make sure you always have the latest security measures.

With that in mind, what about your employees? Do you think they’re better as a line of defense against cyber-attacks?

Seeing as how human error is the leading cause of data loss, you shouldn’t trust them too much. Accidents happen, and these happen more often in the hands of humans.

An employee can make one mistake while coding and you can lose your whole project in one minute. A staff member writing down their password on a post-it note can inadvertently give a malicious person access to the system. An unaware secretary might click on a suspicious link in their email that downloads malware.

The more people you have in your company, the greater the risks for human error. Even a small business can suffer great losses because of this risk.

When to Get Cyber Liability Insurance

The best time to get cyber liability insurance for your business was yesterday. Like every other type of commercial insurance, it’s best that you apply for it soon, so your business becomes prepared for anything.

You may already have compromised data without you knowing. Or, you might not have experienced cyber threats yet, which makes you lucky. Still, that doesn’t mean you won’t be facing other digital risks in the future.

Get Your Digital Assets Covered Now

If you don’t have cyber liability insurance yet, then the second-best time to get it is right now. You never know when the next threat is coming and what form it’s going to take. It could be a loss of data, damaged systems, or stolen information.

Regardless, it’s best to keep yourself insured. Explore your options today. If you need any help, feel free to contact us.