As technology evolves, staying updated with the latest cybersecurity practices is essential to protect your business. According to Security Magazine, there were 1,410 weekly cyberattacks in 2022. The financial impact of cybercrime on businesses is even greater. Forbes notes that U.S. businesses spent over $6.9 billion in 2021 on cyberattacks, and only 43% felt prepared to face data breaches in 2022. Even worse, it costs businesses their reputation and credibility within the marketplace.
With hackers and cyberattacks on the rise, having suitable cybersecurity & intrusion prevention methods in place is not enough. If you desire to expand protection for your network data, consider cyber liability insurance as a part of your cybersecurity plan.
What Is Cyber Liability Insurance?
Cyber liability insurance or cyber liability coverage is an insurance policy that covers your business’s liability in a data breach that involves personally identifiable information (PII) like credit card numbers or personal health information (PHI) such as health records. According to the 2022 Verizon Data Breach Investigations Report, 42% of information taken in data breaches was credential information, and 37% was personal information. For businesses that deal heavily with these forms of data, cyber liability coverage is a further preventative measure to keep your business and clients safe.
Rather than trying to handle the problem alone and causing further damage, cyber liability insurance helps you connect with trusted partners to manage data breaches properly.
What does Cyber Insurance Cover?
Even with cybersecurity measures in place, a cyber attack can still occur. When a data breach happens, both the business and clients are impacted. Client information can be stolen, putting them at risk for fraud and identity theft. Additionally, your reputation is damaged, and you lose trust and reliability within your industry.
In the event your business does endure a data breach, cybersecurity coverage can aid with the following:
- Covering lawsuit costs from clients against the business for accidental data breach
- PR coverage cost to reclaim the business reputation
- Fines from state and federal agencies
- Lost income as a result of a network outage
- Any extortion paid by a ransomware attack
- Any damage repairs needed from issues of computer systems
What Isn’t Covered With Cyber Liability Insurance
While cyber liability insurance does cover some of the costs of a data breach, it should not replace any other insurance you have but rather add to your current or new cybersecurity plan. It also does not cover or replace general liability insurance, professional liability insurance, or covering any mistakes in professional business services. In those cases and others outside of cybersecurity, it is wise to maintain the proper insurance in those areas.
Cyber Liability Insurance vs. Data Breach Insurance
Because cyber liability insurance traditionally caters to large businesses, many small businesses may not see the value in cybersecurity coverage. Verizon’s 2019 Data Breach Investigation Report reported 43% of data breaches involved small business victims. In addition, 56% of those breaches took months or longer to discover, causing significant damage. Data breach insurance helps small business owners respond to breaches promptly and accurately.
Some of the benefits of data breach insurance include:
- Offsetting the costs of affected customers and employees
- Covers the costs of hiring a PR firm if needed
- Provides credit monitoring services to data breach victims
- Business income coverage
- Prior acts coverage to recover losses that occurred before the policy start date
No matter the size of your business, having a form of cybersecurity coverage can help your business recover quickly without a huge financial loss.
How Much Does Cyber Insurance Cost?
Cost is always a factor when considering the cost of any cybersecurity measures. Cyber liability insurance costs depend on various factors, such as the number of customers, the type of data stored, business revenue, current cybersecurity practices, and any past claims.
Cyber Insurance Requirements
Cybersecurity coverage is available to all but requires specific cybersecurity measures beforehand, such as multi-factor authentication, cloud solutions, MDR, 24/7 365 security monitoring, and more. With the necessary IT support in place, your business may find it easier to receive the proper cyber liability insurance.
If your business lacks some of these security measures, ABI can work with you to establish a solid IT security plan.
Cybersecurity Is Necessary
Cyber insurance may seem like an additional burden, but it is crucial to consider when working through your business cybersecurity plan. Don’t let your business be a breeding ground for hackers. Instead, remain proactive by consistently updating your IT security plan as needed.
If you are considering cybersecurity coverage or need further IT support, start with a free consultation with ABI to protect your business today.
