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Why Every Business Should Consider Cyber Liability Insurance

Posted October 10, 2019 in Running a Business 101
With more and more businesses using customers' online data, businesses should consider how cyber liability insurance can help them protect their digital assets.

Running a business, regardless of its size or industry, entails a lot of hard work and discipline. And making sure your day-to-day operations go smoothly requires you to invest the right time and resources.

Keeping those investments protected is important, which is why businesses carry insurance to cover a variety of business assets. Some of the most common policies business owners are familiar with are general liability, commercial property, and worker’s compensation insurance, which cover the core components of a business, specifically the physical assets as well as your employees' wellbeing.

But it’s also important to remember your digital assets. In today’s hyperconnected world, people rely heavily on the internet, and it’s imperative for business owners to embrace technology to maximize the way they operate to run as efficiently as possible. The data your business handles, including credit card numbers, account details, personal information, and payroll information, are all business assets that need security and protection just like the rest of your business.

Related Article: Why Cybersecurity Should be a Priority for Your Small Business

You may think that only large corporations are vulnerable to hacks and data breaches, but hackers are increasingly targeting small businesses. In fact, a study by the SMB Group found that in 2017, 70% of all cyberattacks targeted small businesses.

A single data breach can cost you thousands of dollars in paying legal fees, investigating the incident, and notifying clients about the cyberattack, as well as the costs in downtime and restoring data. One breach could also do irreparable damage to your reputation. In fact, the same study by the SMB Group found that 60% of small businesses shut down within six months of a cyberattack, which illustrates why carrying Cyber Liability insurance is more important than ever.

The Benefits of Cyber Liability Insurance

According to a RIMS cybersecurity survey, 74% of companies without cyber protection are considering buying a policy because they are concerned that a data breach could damage their reputation.

Cyber liability insurance provides your digital assets with a layer of protection so you don't lose substantial amounts of money or have to completely halt business operations as a result of the breach. With this policy, you are transferring some of the risks of a cyberattack instead of taking on the risk yourself. Having Cyber Liability insurance also enables you to offset any financial impact of a business interruption caused by a cyber attack.

This policy can protect your business against cyber-related claims, but there are several other layers of protection that businesses should have in place. It is essential to comply with industry standards for data security and make sure that your employees follow company security protocols to keep hackers at bay.

Who Should Buy Cyber Liability Insurance?

If your business processes and handles personal or financial information of employees, customers, or clients, you’ll want to consider cyber liability insurance. Most small businesses don’t regularly update their software or invest in encrypting data, this leaves them vulnerable to expensive settlement and legal fees. A report by SmallBizTrends found that on average a data breach costs a company over $880,000. Could your business survive a setback like that? If not, cyber liability insurance is a great option to help protect your business.

How Can You Buy Cyber Liability Insurance?

In general, the world of insurance can be daunting. With so many factors to take into account and different policies to choose from, choosing the right coverage can be challenging. But don’t let it stop you from protecting your business against cyber attacks. There are online tools, like the Advice page from CoverWallet, that will show you what businesses like yours typically purchase and how much it costs.

We're getting further into a digital age that requires people to use their online data to complete many day-to-day tasks. And if your business handles that data, you must be prepared to protect it. Cyber liability insurance is one way to do just that.

It protects your business against huge financial losses associated with cyber attacks such as identity theft and data breach. With this policy, as well as the data security and protection procedures within your business, you can minimize the impact of a cyber incident damaging your business.

By Emily Lazration, CoverWallet Emily is the Content Marketing Specialist at CoverWallet, a tech company that makes it easy for businesses to understand, buy and manage commercial insurance online. She has written for several outlets including Inc., Ooma, and Fundera covering small business news and advice.