Cyber Liability Insurance
Cyber Liability Insurance (also called Cyber Risk Insurance or Data Breach Insurance) protects businesses from the growing threat of data theft.
Hackers may break into your network looking to steal bank account information, personal data, social security numbers, and other data that can use to steal money from you, your employees, or customers.
It's easy to underestimate the cost and likelihood of a cyber attack. So let's look at some numbers. A recent Wall Street Journal article points out that small businesses are actually more vulnerable to cyber attacks, with 72% of cyber attacks targeting businesses with fewer than 100 employees.
How much does an attack cost your business? That same WSJ article tabulates that each record a hacker steals from your business ends up costing you around $200. In other words, if a hacker accesses 100 files with customer data, the cost to your business may be around $20,000.
Cyber Risk Insurance Options
There are two "types" of Cyber Risk Insurance:
- First-Party Response
- Third-Party Defense and Liability
First-Party Response protects your business when its computers, VPNs, website, and other networks are hacked. If a hacker steals data from your computers, this insurance policy can pay for your response to investigate the attack, inform your clients, and monitor for signs of fraud or identity theft.
Third-Party Defense is liability insurance for IT businesses or other companies that manage, install, or sell computers or software to their clients. If a customer is hacked, they could sue your business if it sold them the computer or software that was breached or designed the network that let a virus in. This insurance pays for the cost of cyber liability, privacy, or other lawsuits.
Depending on your liability exposures, your small business may need one or both of these insurance policies.
What Does First-Party Cyber Liability Response Cover?
First-Party Data Breach Insurance helps your business deal with the aftermath of a cyber attack. When your data is hacked, what you do next is extremely important. You have legal obligations to inform your clients about the breach. At the same time, you need to rebuild trust between you and your customers.
First-Party Response can guide you through this process, reducing your risk of lawsuits and helping your business rebuild. This type of Cyber Risk Insurance pays for:
- Crisis management after the attack.
- The cost of contacting customers and other people whose data was breached.
- Additional staff you need to respond to the attack while also keeping your normal business operations running smoothly.
- New advertising and P.R. campaigns to rebuild your small business's reputation.
- Fraud and credit monitoring for clients, employees, and other people whose data was hacked.
- Reimbursement for cyber extortion attempts when hackers threaten to install viruses and other malicious software on your computers.
- Investigations regarding the cause of the attack, how your network was breached, where it is vulnerable, and who is responsible.
Cyber Liability Insurance can help your business fulfill its obligations to customers, root out the source of the attack, and restore your reputation.
Which Businesses Need Third-Party Cyber Defense and Liability Coverage?
You may need third-party Cyber Liability Insurance if your business:
- Installs computers, networks, or software for other businesses.
- Sells software or applications.
- Sells network-able devices.
- Programs applications or software.
- Designs websites.
This insurance is largely for IT-related small businesses and pays for lawsuits and other costs when a client's network is hacked. Clients can hold your business responsible if cyber criminals hack your software, computers, or other products.
Cyber Risk Insurance with Third-Party Response can pay for:
- Lawyer's bills, court costs, settlements, judgments, and other legal expenses if a customer sues your business after having their network hacked.
- Media liability lawsuits from trademark or copyright infringement.
- Breach of privacy lawsuits from customers or clients.
Beyond Cyber Liability Insurance: Cyber Security Tips
As they say, the best defense is a good offense. Go on the offensive and take these proactive measures to reduce your risk of cyber attack.
- Train your employees and set up security protocol. Set strict password requirements and train your employees on proper security protocol. Document your expectations in your employee handbook.
- Invest in security software. Make sure your business has adequate security software and firewall coverage for its networks. If you or your employees use personal computers or devices on your network, remember that this can open your business up to more security breaches. Your network is only as safe as its least-secure device. An employee's laptop without a strong firewall can compromise your entire business's network security.
- Use VPNs for remote employees. Virtual Private Networks allow remote employees to access your company's main networks. These can be a secure option for employees on the road or working from home, but they can be vulnerable to attack as well, so make sure you and your employees have proper firewalls and security software.
- Encrypt your data. Many computers and networks can encrypt data when you it’s not in use. Often, encrypting your data is as simple as checking a setting in your computer preferences or security software.
- Have a plan for how to respond to a cyber attack. Just as you might have a tornado or hurricane emergency response plan, your business should have a cyber attack response plan.
Lower your Small Business Data Breach Insurance Premiums
By following some of the tips we outlined above, your business may qualify for lower Cyber Liability Insurance premiums. Having documented cyber attack response protocol (in your employee handbook or elsewhere), setting high standards for password requirements, and having strong, up-to-date security software are among the ways your business can reduce its Data Breach Insurance premiums.
Online Insurance from Small-Business Experts
Fast, simple online insurance. That's what we offer. With a streamlined insurance application, your business can get insurance quotes in as fast as 15 minutes.
If you need coverage to sign a new contract, meet state requirements, or to cover your liabilities, we are often able to get your business covered and send you a digital Certificate of Insurance in under 24 hours.