As a business owner, you want to protect your hard work and your business from any risks that you can. However, other than the typical business insurance that you get to cover your physical property, you will also need to treat the digital side of your business in the same way.
Without cyber insurance, you are leaving your business wide open for cyber crime. Issues like data theft and other related crimes are on the rise every day. Studies show that cyber attacks occur in North America a staggering 4,000 times per day.
Your cyber security should therefore not be taken lightly. Even if you think that this type of crime would never happen to you, there is still plenty of risk involved if you choose not to protect your business’ and customers’ sensitive information from cyber criminals.
What is cyber insurance?
Let’s begin by defining what exactly cyber insurance for your business entails. Cyber insurance is a type of insurance that covers your business’ liability for data breaches, which includes the loss of financial and personal information like names, Social Insurance Numbers, or banking and health records. So, your cyber insurance will protect you in the event of a network security failure.
There are many different types of cyber insurance, but in general, most cyber insurance policies will cover the following:
- Any fees associated with legal and court costs
- Any costs associated with investigation of the data breach
- Any necessary customer notification requirements
- Any fees associated with recovering the data lost or stolen
- Any costs to fix and restore compromised software and systems
Most businesses are required to have a general liability policy coverage, but these policies usually do not include cyber insurance. This means that only having your regular business insurance will not cover you in the event of a network security failure, or any other type of hacking or cyber crime related events.
However, you should keep in mind that simply having a cyber insurance policy in place won’t prevent a cyber attack from happening. This for the same reason that having property insurance won’t prevent a fire from breaking out.
Cyber insurance will make sure that your business stays financially stable during a cyber breach. Your cyber liability insurance will help lighten the risk should a data breach or other similar event occurs. While cyber insurance has very recently become a product in the insurance world, the demand and need for it has grown exponentially in recent years, especially since many businesses have moved their operations online.
Here are some reasons why you need to get cyber insurance for your business.
Protect Your Customers’ Sensitive Information
If your business uses an in-house server, or you store data up in the cloud, it’s highly likely that you store some of your data and files with sensitive customer information in a digital format. This information is seen as a goldmine for hackers and cyber identity thieves. Their goal is to steal identities and financial information in order to cash out on fraudulent accounts and, in some cases, they may even attempt to extort your business to get the data back.
A cyber insurance policy will help you with the costs associated in recovering that data, as well as notifying your customers and making sure your network is secured and protected from future attacks.
Get Coverage During a Business Interruption
Some types of cyber-related instances can cause a disruption in your business finances. Your bank accounts could be compromised, or you may lose access to critical financial systems or equipment, thus putting a halt to your business operations. In the same way that a physical disaster can put your business to a stop, so too can cyber incidents.
Did you know that almost half of all businesses fail to reopen after they experience a serious business interruption? These situations might cripple a business permanently, or they could take months or years to resolve them, if at all. Studies show that around 90% of businesses fail in under two years after experiencing such a disaster.
Your cyber insurance policy can help you cover your losses, give you much needed relief funds, and get your business back online and operating quickly so you can avoid closing down.
Cybercrime is Constantly Growing
Cybercrime is no longer just a petty crime; it is actually run by highly organized groups of criminals. Instead of thinking that something like this would never happen to you or your business, you need to shift your mindframe to “when” it will happen. It is only a matter of time. Because these cyber criminals understand how to locate and identify vulnerabilities in your systems and take advantage of them, having a lack of cybersecurity is pretty much opening the door and letting them in.
Even Small Businesses Can Fall Victim
When it comes to cyber attacks, small businesses are targeted more frequently compared to larger ones. The main reason why is because small businesses think that they don’t need the resources necessary to protect themselves online. However, cybersecurity does not need to cost a lot of money.
For example, small businesses can invest in multi-factor authentication (MFA), which is an added layer of security that can be put on top of your username and password. It uses an additional step of verification before allowing you to log into any important accounts or access restricted files. Almost all victims of cyber-related crimes do not have this type of extra authentication in place.
Coverage is Affordable Yet Offers Wide Ranging Protection
Considering the amount of protection provided by cyber insurance, its cost is fairly cheap. Some benefits of getting cyber insurance can include:
- Being protected from any loss of income during a cyber attack.
- Online support to offer assistance if you have questions or need help.
- Legal support from a breach response team.
- Post-coverage for your clients should anything happen, which includes notification and credit or identity monitoring.
- Support for public relations to help manage your reputation after the attack occurs.
Cyber insurance will typically cover a wide range of key attacks. This includes ransomware, social engineering, bricking (which destroys computers and mobile phones), customer records, and financial information. Each one of these attacks can be damaging to both your business’ reputation and your financial health.