Should your business consider cyber liability insurance?

If your business does anything online – and in 2021, it probably does – the threat of a cyber security event is probably on your radar. And if it’s not – it should be. Data shows ransomware attacks increased by 93% in the first half of 2021.

Targets of cyber crime can face serious damage, such as misuse of personal information, legal fees, and specialized repairs. For this reason, many insurance providers have begun offering cyber liability coverage among their suite of business insurance products.

If you’re a business owner who is reasonably nervous about the potential of being targeted for cyber-crime, this coverage might be a security strategy worth looking into. In this article, we take a look at what these products often entail and how they can help protect you.

How could a cyber attack hurt your business?

Recently, research has found that the average cost of an uninsured large business recovering from a ransomware attack is $1.85 million. While ransomware is only one type of attacks, there are a lot of risks associated with any kind of cyber-crime, some of which are hard to come back from as a brand. These include:

• Loss and destruction of business and customer data.
• ?Leaking of confidential business or customer information.
• Damage spreading across your network, to employees’ and contacts’ devices.

After a data breach, there is also a chance your affected clients and business partners could sue for damages.

What is cyber liability insurance?

Chris Ham, sales manager at CoverWallet, describes cyber liability insurance as “a form of financial and legal protection for businesses and other organizations that use and store sensitive information (like Social Security numbers and credit card information)”.

Cyber liability insurance is aimed at larger businesses that need more cyber protection. It allows for larger-reaching companies to respond to cyber attacks and recover data.

It is not the only kind of cyber-crime-related insurance out there but is not to be mistaken with data breach coverage or technology errors and omissions insurance. The former assists businesses when sensitive data is exposed in a breach, while the latter covers damages caused by errors in your company’s technology products and services.

Cyber liability insurance is an ideal coverage option for companies who handle personal and sensitive data, including:

• Customer and employee identification information.
• Financial account information.
• Healthcare or medical information.
• Confidential legal information.
• Intellectual property.

What does a common cyber liability plan cover?

In most cases, cyber liability insurance covers the damage that your business suffers because of a cyber security breach.

This includes the major expenses of the recovery process, including:

• Data recovery expenses.
• Investigative services.
• Identity recovery expenses.
• Damages impacting your customers or business partners, such as legal fees, customer notifications, and settlement costs.
• Expenses incurred from network outages.
• Ransom payments in the case of cyber extortion.
• Regulatory fines.

Of course, like with any insurance plan, there are costs cyber liability plans don’t often cover, such as:

• Property loss related to a data breach.
• Loss of potential or future profit or revenue.
• Subsequent upgrades with security software.
• Loss of value to intellectual property consequential to a data breach.

There are endless fees that can be associated with a serious cyber-attack. It can be hard to properly assess the potential cost to your business. If you are concerned at your company’s ability to bounce back from an incident like this, coverage could very well be the security you need.

What is the price of cyber liability coverage?

As with other kinds of coverage, cyber liability insurance rates are dependent on a number of variables.

Each business has a different exposure to cyber risk, which will determine the amount of coverage it needs. Factors that impact the price include:

• Your network security.
• Who has access to your systems and data.
• Your claims history.

Some providers offer two levels of coverage; a smaller policy that can be added to a business owners policy, and a larger policy that would be standalone.

In conclusion…

Any business, especially one that deals in sensitive personal or financial data, has a lot to lose from a cyber-crime event. Cyber liability insurance makes sure your business isn’t ruined financially or legally by one of these increasingly common instances.