Here’s Why Your Business Needs Cyber Liability Insurance in Today’s World

One cyberattack can bring down your business. Protect yourself. It’s easy and affordable.

Key takeaways:

• Unfortunately, 60% of small businesses close their doors within six months of a cyberattack.?
• Cyber liability insurance is very affordable, especially when you consider what a data breach can do to your company. Even if you survive, there’s always reputational damage.
• We live in a litigious society. A cyber liability policy covers you in the event of a lawsuit that can come from both expected and unexpected sources.
• One big benefit of cyber liability insurance is the coverage it provides for both income loss and expenses to restore operations.

Customer information is a magnet for cyber thieves who use it for everything from identity theft to credit card fraud. You might think because your business is small, it would not be a target for a security breach, but 61% of small businesses?reported a cyberattack?in the past year.?

It isn’t just your customer’s data that’s at stake, either. On average, the financial cost of a?breach to a small business?in the U.S. with less than 250 employees is $25,612. 60% of small businesses also?go out of business?within six months of a security breach.?

Cyber liability exposures are a real threat, but fortunately, there’s cyber liability insurance to protect your business and livelihood. Let’s talk about why your business needs cyber liability insurance and what it covers.

Every business needs cyber liability insurance

The stats above are pretty convincing. Although you might?think your business is so small?it can fly under the radar of cyber thieves, that’s just not the case. Where there are customer records, there?exists the potential for a data breach?that exposes confidential information, an attack on your computer network that disables or damages it, as well as extortion – ransomware – to give you back stolen information.

Every business that?stores or uses sensitive information?needs to protect itself with cyber liability insurance. Sensitive information includes credit card numbers, Social Security numbers, customer names, and customer addresses. This would include accountants, consultants, contractors, hair salons, restaurants, and retailers. The list goes on, but you get the idea.?

What is covered by cyber liability insurance?

Simply put, cyber liability insurance helps cover any damage to your business caused by a cyber security breach as well as claims and lawsuits. This means coverage for investigative services and data recovery, as well as identity recovery, legal fees, customer notifications, and any settlement costs. Here are some coverages you’ll find in a cyber liability insurance policy.

Coverage for the cost of a data breach

• Restoration of data.?This covers the cost to replace or restore your electronic data, applications, or software damaged or destroyed by an attack from a hacker, a virus, a Denial-of-Service attack, and other covered perils listed in your policy.
• Income loss.?This is a biggie. This covers income lost by your business and the extra expenses incurred to restore operations after an attack or other covered peril. Check with your agent if you need coverage for income lost due to a supplier or other vendor’s shutdown because of a data breach.?
• Extortion.?Sometimes the damage has been done, and a hacker has stolen data. They now want you to pay to get it back. If not, they threaten to release it to bad actors who will exploit it for their own gains and harm your business in the process. In other cases, the hacker hasn’t done anything yet but is threatening to damage data, plant a ransomware virus, or conduct a Denial-of-Service attack. Your cyber liability policy would cover the extortion payment and related expenses, including hiring an expert negotiator.?
• Notifications.?When you experience a data breach, it is required by law that you notify anyone whose data has been compromised. Your policy will cover this and can cover the cost of providing your customers with free credit monitoring services or establish a call center if needed to field their concerns.
• Crisis management expenses.?These expenses include the cost of an attorney, forensic accountant, technical experts, or public relations help to figure out the scope of the damage, discover which data was compromised, aid in mitigating the loss, and protect the reputation of your company.?

Despite your best efforts to mitigate customer losses, sometimes you might find yourself embroiled in a lawsuit. Cyber liability insurance helps here, too.

Claims and lawsuit coverage

Cyber liability insurance generally covers defense costs plus damages or settlements. Keep in mind that lawsuits can come from several places, including customers, financial institutions, and credit card companies, as well as other businesses that were affected by the data breach. These lawsuits usually involve causes such as negligence, breach of contract or warranty, unfair or deceptive trade practices, breach of fiduciary duty, or false advertising. Typical coverage includes:

• Network security and privacy liability that covers claims arising from negligence, failure to notify about a data breach and failure to prevent a breach. It also covers errors and omissions, usually connected to the failure to protect sensitive data.?
• Electronic media liability provides coverage for lawsuits filed against your business for things such as libel, slander, defamation, invasion of privacy, domain name infringement, and copyright infringement. Note that these events are usually only covered if the data stolen from your business is published on the worldwide web.
• Regulatory fines and penalties can be incurred when you have a data breach. This part of the policy also pays for an attorney to help you respond to any proceedings.?

It’s easy to see how defenseless your business is without cyber liability insurance. If you already have a data breach policy, it’s important to know that data breach insurance will only cover you in case of a data breach, and doesn’t offer the same protection as a cyber liability policy. If you own a technology company, your technology errors and omissions policy will only cover damage and errors that result from your products and services but does not protect you from attacks that come from outside your company. At an average cost of $124 per month, it’s something your business really can’t afford to do without.

Cyber liability insurance from Avante

Cyber liability insurance is a must for every business today as cybercriminals become more and more sophisticated. At Avante, we’ll work with you to build the complete coverage you need with a deductible that works for you.?Reach out today, because you never know what tomorrow will bring. At Avante, we’re always standing by.

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.

You can read the original article at https://www.avanteinsurance.com/why-small-businesses-need-cyber-liability-insurance/