What is Cyber Insurance?
Like all insurances, cyber insurance protects its policyholder from risks. These risks could bring financial strain or ruin to the policyholders’ businesses or lives.
Unlike standard insurance policies, cyber insurance is only for digital theft. It helps to financially compensate a person or company in case of a data breach. Traditional liability policies often don’t cover cyber risks, or they’re excluded altogether.
Purchasing a cyber insurance policy is a crucial step in owning and operating a business. Your plan can offer you financial assurances in the cases of:
- Technological breach of your digital records
- Breach of your computer system
- Breach of your personal data
- Breach of sensitive information belonging to your clients
- Any legal fees that may go with such events
Why Does My Business Need Cyber Insurance?
Your business likely stores sensitive information about your customers and employees. Depending on the type of company you own, you may have confidential business data as well.
Cyber insurance offers protection that covers commonplace online risks. These online risks are often ignored by general liability policies. Bodily injury, property damages, or physical theft of company assets are all covered by general liability.
Cyber insurance is important because:
- A cyber attack happens in the United States every 39 seconds.
- Cyber attacks affect one out of every three Americans yearly.
It cannot be understated how essential cyber insurance is to a small business!
Imagine if your online database were to be hacked by an unknown, outside source.
Your company’s delicate information would be compromised, along with the details of your customers. Social security numbers, credit card details, account numbers, and more could be stolen.
Informing your clients of a data breach is daunting. Cyber insurance would assist you in spreading the word of the digital break-in, as well as help with data recovery. It could also help with legal fees or credit monitoring services.
Do Small Businesses Need Coverage?
In fact, many businesses should be utilizing cyber insurance. Definitely included in the list are accounting firms and medical offices. Companies in the IT industry and sales space should also be included.
In fact, according to Cybint, an overwhelming 43% of cyber attacks are now aimed at small and medium sized businesses.
With a digital world that shows no sign of slowing down in growth, more and more companies should be opting in to cyber insurance. A business that needs to collect and store personal and financial data should purchase a cyber insurance policy.
Companies with a higher volume of data do tend to pay more monthly for a cyber insurance policy. This is because, typically, it costs more to recover from a cyber incident when large amounts of sensitive data are involved.
What Exactly Does Cyber Insurance Cover?
Cyber insurance policies are made up of several different aspects, the first of which dives into errors and omissions.
The Errors and Omissions (E&O) section covers insurance claims that may arise from your company’s mistakes.
These can be anything from software and online consultations to your professional services. This section would be mainly driven towards engineers and physicians’ offices.
Another coverage category within cyber insurance would be network security.
In 2018, online hackers breached and stole half a billion personal records. If the companies involved did not have network security coverage, they would be on the hook for compensating their users for the data breach.
Network security would deal with a failure in your online security system. That failure may leave you and your clients exposed to viruses, consumer data theft, cyber extortion, etc.
Cyber insurance may include a media liability portion within your policy. This would specifically help protect your business from copyright and trademark infringement. Slander and libel claims would also fall under this portion of your cyber insurance.
Why Does My General Liability Insurance Policy Not Include Cyber Insurance?
Your general liability insurance policy protects you and your company from financial loss. Some of these losses can include:
- Losses caused by property damage
- Action taken by third parties seeking financial retributions due to bodily injury
Some general liability insurance policies may cover certain aspects of a criminal cyber attack, but many fall short. After all, there are many potential liabilities with personal data.
The ramifications of a cyber attack can be devastating to a business’s financial success. It is no wonder the estimations for annual damage costs by the year 2021 will exceed $6 trillion.
Approximately 55% of small businesses have experienced some form of cyber attack. Also, in those affected by an attack, 53% reported that they were hacked multiple times.
Internet crime happens more and more every day.
In conclusion, it’s becoming increasingly important that business owners purchase cyber insurance. These policies can help to protect not only their assets, but also the assets of their clients that trust your company. Cyber insurance can help secure a bright financial future.
What Will a Cyber Insurance Policy Cost My Business and Me?
The cost of a cyber insurance policy can vary substantially depending on a variety of factors surrounding your business. One of the main factors would be what exact coverage does your business need, and what your limits for risk are. Any company that shares in a partnered contract would also require a higher coverage limit, which you could customize.
Customization on your policy would ensure you’re only paying for the coverage that you and your business actually need. As it is with many things in life, the more significant your potential loss, the higher the cost would be for protection.
How Do I Learn More?
To learn more about cyber insurance, please contact the experts at Orchid Insurance at 772-257-7977. Our licensed professionals will be happy to answer any questions you may have.