Protecting Your Small Business with Cyber Liability Insurance
You’ve probably heard the alarming statistics—small businesses are the primary target for cybercriminals due to their vulnerability. According to a recent article in Security Magazine, nearly two-thirds of small businesses (63%) have experienced a cyber-attack, with 58% having faced an actual breach. However, what many fail to realize is the extensive financial impact a cyber-attack can have.
That’s why cyber liability insurance is one of the fastest-growing categories in the insurance industry. It covers the significant costs associated with a breach, which can include:
- Legal fees for handling lawsuits, including class action litigation and regulatory investigations.
- Payment of ransomware demands.
- Data restoration and emergency IT expenses to recover your network.
- Customer notifications, credit monitoring, and identity theft protection.
- Public relations services and call center costs to address inquiries.
- Loss of revenue resulting from the inability to transact due to disrupted operations and data.
Additionally, errors and omissions coverage protects against liability related to service failures and allegations of negligence in safeguarding customer data.
To safeguard your hard-earned assets from cybercriminals, cyber liability insurance is a critical component. However, it’s crucial to understand that insurance companies require businesses to implement robust cyber protections to qualify for coverage. Insurers want to minimize the likelihood and financial impact of a cyber-attack, ensuring they don’t have to pay out claims. This is where your attention is needed.
Many business owners falsely claim they have implemented cybersecurity policies and protections, such as two-factor authentication, strong passwords, employee training, and data backups. They assume their IT company or professional is handling these measures, which is often not the case.
Unless you have expertise in cybersecurity, it’s easy to unintentionally misrepresent or make false statements in your insurance application, potentially leading to coverage denial or policy rescission in the event of an attack.
If you have cyber liability insurance, it’s crucial to review your application with your IT company or professional to ensure they are effectively implementing the measures you claimed to have in place. Your insurance agent or broker should assist you in this process, as they have the knowledge to interpret legal requirements accurately.
It’s critical to collaborate with your IT company or professional to achieve 100% compliance with the security standards and protocols outlined in your insurance application. In the event of a breach, your insurance provider will conduct an investigation to determine the cause. They will require tangible evidence and documentation proving the preventive measures you had in place. Failure to implement the adequate preventative measures you affirmed could result in claim denial.
Protect your business and ensure comprehensive coverage by taking the necessary steps to fulfill the cybersecurity requirements outlined in your insurance policy. Don’t rely solely on assumptions—verify that your IT measures align with the commitments you made in your application.
If you have ANY concerns over this – including whether or not you need coverage, whether your coverage is sufficient and whether you are doing what you need to do to avoid an insurance denial, click here to schedule a quick consultation to discuss your current situation and to receive a referral to a cyber insurance expert we recommend.
Further, if you would like us to conduct a FREE cyber security risk assessment to show just how secure and prepared you are for ransomware or a cyber-attack, we can discuss that too! Just click here to schedule a phone consultation.