CYBER LIABILITY
What Is Cyber Liability Insurance?
Who needs it?
When criminals infiltrate a network, steal data, or hold data hostage, the business they steal from could be held liable. A data breach at a small business can end up costing thousands of dollars in customer notification expenses, attorney's fees, and fines or settlements.
In fact, the average cost of a small business data breach is $86,500, according to the internet security firm Kaspersky Labs. The coverage included in cyber liability insurance pays these costs, allowing your company to survive a breach.
Any business that stores or processes sensitive information like names, addresses, Social Security numbers, medical records or credit card information needs cyber insurance.
As more small businesses choose to use and store digital data, the need for this coverage has expanded to more than just the healthcare and banking industries. A few of the many businesses that should consider a cyber policy include:
**Retailers**
**Restaurants**
**Hair salons / Barbers**
**Contractors**
**Realtors**
**Consultants**
**Financial firms**
**Marketing companies**
Businesses that purchase this policy now are typically handle:
Credit card or bank account information
Medical information
Social Security or driver license numbers
Customer names, email addresses, phone numbers, and addresses
Cybersecurity for other businesses
The importance of cyber security insurance
Cyber insurance is important to the financial well-being and future of your small business. A single claim can be costly and difficult to overcome on your own. Cyber security helps reduce the potentially devastating effects of a claim. It can cover costs related to IT forensics investigation, data restoration, legal liability and customer notification.
A cyber insurance policy allows you to spend less time worrying about cyber threats, and more time on what matters most – your business.
Small businesses are a common target for cyberattacks
Many business owners assume hackers won’t target their small business, but a recent report by Verizon found that 61% of all cyberattacks hit small businesses. These attacks are often successful since small businesses are less likely to have a strong defense.
Hackers often target retailers, healthcare organizations, and financial service providers, but any business can fall victim to a data breach. Cyber liability insurance is a key policy for companies that handle sensitive information, work in the cloud, or operate in cybersecurity.
Cyber insurance covers a variety of risks that are divided into two parts: First-party coverage – Covers damages you and your business suffer because of a data breach. This can include things like investigative services, business interruption coverage and data recovery.
Third-party coverage – Covers damages if your customers or partners are affected by a cyber attack on your business. This can include legal fees, settlement costs, security failure and media liabilities.
First-party versus third-party cyber liability insurance
There are two types of cyber liability insurance. First-party coverage helps cover expenses when your network is hacked or your data is stolen. Third-party coverage offers protection when a client sues your company for failing to prevent a breach at the client's business.
First-party cyber insurance can cover:
Cyber extortion payments
Hiring an expert to investigate the breach and assist with regulatory compliance
Notifying affected customers
Customer credit and fraud monitoring services
Crisis management and public relations
Business interruption expenses, such as the cost of hiring additional staff, renting equipment, or purchasing third-party services
Third-party cyber insurance can cover:
Legal defense costs
Settlements if you and the client settle out of court
Judgments you're legally obligated to pay after a data breach
Other court costs
Does cyber insurance provide coverage for data breach lawsuits and legal fees?
Yes. Your cyber insurance policy covers things such as legal fees and settlement costs - up to the policy limit - in the event of a data breach.
What doesn’t cyber insurance cover?
Cyber insurance does not cover losses indirectly caused by a data breach or cyber attack. So, a loss of intellectual property or damage to your brand caused by a data breach wouldn’t be covered.
Does cyber insurance have a deductible?
Yes. You select the amount of your deductible. A deductible is the fixed out-of-pocket expense you agree to pay before your coverage starts to pay. The deductible applies each time a loss is covered under your cyber policy.
HERE are some recent Examples of data breaches
Cybercrime is a multibillion-dollar industry. Security firms constantly struggle to stay one step ahead of hackers looking for lucrative victims. Even with careful security measures in place, catastrophic data breaches can, and do, occur.
Here are a few examples:
In May 2015, CareFirst BlueCross BlueShield had 1.1 million records compromised after hackers gained access to a database that members use to interact with the company's website and services.
In March 2016, hackers stole the information of about 1.5 million customers from Verizon Enterprise Solutions.
In May 2017, the WannaCry ransomware cryptoworm struck worldwide. It encrypted data and demanded ransom payments in Bitcoin.
In July 2017, Equifax experienced a massive data breach that compromised the personal information of 143 million Americans.