Does your business use a computer? If the answer is yes, (and it’s safe to say that is the answer for most;) your business is in danger of a data breach. Cyber security is a problem for every business, but a shockingly low number of businesses have actually invested in cyber liability insurance to combat the devastating ramifications of a cyber-attack.
A cyber policy is one of the best defenses against a data breach, so we’ve listed the top five reasons why all businesses should consider investing in this essential insurance.
1. It can insure more than you might think.
At Starke’s recent Cyber Liability Lunch & Learn, a Travelers Insurance representative broke down each type of coverage, along with the components of a cyber policy that is available, and these policies cover more than most business owners would expect.
For example, many policies offer “first party” coverage—meaning your insurance company will pay for things like business interruption, extortion, the cost of notifying customers of a breach, and even the expense of hiring a public relations firm to repair any damage done to your image as a result of a cyber attack. Additionally, there are policies and other coverages, such as “third party” coverage that will cover fines, penalties or defense expenses for network and information security.
2. You’re still responsible for breaches, even if you hire an outside vendor to host your data.
Many businesses have begun using cloud computing, also referred to as “the cloud”, for services like website hosting, payroll, customer relationship management, data storage and more. However, the cloud is still a shared responsibility between the cloud vendor and the cloud customer. The customer may assume he has transferred the risk when their data is in third party hands. While that is not the case, most cyber insurance policies define a “computer system” to include third-party networks, so if a breach does happen the policy will cover it, regardless of where the data was stored and when the breach occurred.
3. General liability insurance does not cover data breaches.
Typically, a general liability policy specifically excludes losses incurred because of the Internet. This means that businesses should look to cyber liability insurance to pick up where their general liability leaves off.
4. You probably don’t have an in-house risk management team.
Big corporations have entire departments devoted to analyzing risks the company could face and helping set policies and procedures to protect against them. If your business does not, an experienced risk management firm can carry out these duties for you, by recommending preventative measures and insurance coverages that would protect your business against data breaches and hackers.
5. One Call Claims
In the event of a breach and a proprietorship of a cyber policy, many insurance carriers claims departments have a team of professionals ranging from breach coaches, forensic experts, breach notification vendors and specialized legal council to guide you through the unfortunate event. Resources like these can make a world of difference for small businesses that experiences a cyber security breach—especially when considering that roughly 60% of small businesses will permanently close within 6 months of a cyber attack.
With increasing risk in cyber security, cyber liability insurance has become a must for businesses large and small. For more information on addressing and insuring your businesses cyber risk, click here to download a copy of our cyber risk presentation, or contact any Starke Agency representative to learn more.