The mind of a business owner is filled with strategies to keep the company going, so getting cyber liability insurance out of the blue might just not fit in with their priorities. However, you have to remember that no business is too small to get targeted by cybercriminals.
If you have a small business that hasn’t been hacked yet or if you’re currently experiencing a cyberattack, now is the best time to think about cybersecurity.
Cyberattacks On Smaller Businesses
It’s easy to dismiss cybersecurity when you’re operating a small business. You might think that security breaches and cyberattacks only affect bigger businesses. However, approximately 40% of all cyberattacks are aimed at companies with 500 employees or less. This is because smaller businesses are an easy target due to the following:
- Human error or rogue employees
- Fraudulent email invoices
- Ransomware attacks
- Spyware intrusion targeting customer records that are not secure
- Poor control and lack of encryption tools installed on laptops and other mobile devices
Alert Logic reports that 58% of malware attack victims are small businesses. 94% of those attacks come from malware or phishing emails disguised as package delivery notifications, email delivery failure notices, bills, and invoices.
Cyberattacks like those can cost smaller businesses up to $200,000 on average if the effects are any of the following:
- Loss of customers
- Damaged reputation
- Distracted and unmotivated staff
- Fines and damages
- Data loss
- Legal defense and settlements
- Expenses for remediation
What Is Cyber Liability Insurance?
General liability insurance is important for any small business. However, that only covers things like property damage or bodily injury. They do not touch on problems unique to the digital world.
The risks and repercussions you might experience with cyberattacks and cybercrimes are usually not covered under traditional commercial insurance policies. Cyber liability insurance is an important investment you need to make in order to ensure that you and your business are properly protected.
As technology continues to evolve, more and more risks that did not exist in the past have arisen. Cyber insurance is for the protection of businesses against web or internet-based risks. The most common of those risks you can be insured against is a data breach.
More often than not, cyber insurance is divided into two categories. However, a given policy or package may have components of both.
- First-party insurance or the insurance that provides compensation for damage to your own business
- Third-party insurance or the insurance that covers damages to other people or businesses affected by a cybercrime done to your business
What Does Cyber Liability Insurance Cover?
Cyber insurance covers losses from theft of intellectual property, network security breaches, and loss of privacy. It also includes coverage for the following:
- Restoration of personal identities of affected customers
- Repair of damaged computers, systems, and networks
- Legal fees and expenses
- Recovery of all compromised data
In order to get the right protection for your small business, you should consider each element of your coverage and its financial compensation limits. Don’t hesitate to communicate with your insurance specialist to find out what kind of coverage you have and if you have enough.
While having cyber liability insurance is a great investment, nothing can replace cybersecurity. This type of insurance will help provide financial compensation in case someone attacks your business, but it is not a preventive measure.
Panorama Insurance Agency works with several companies to find a policy that meets your cyber liability insurance and other commercial insurance needs. Contact us at (818) 781-6630 today.