62% of retailers in the U.S. have experienced a data breach at some point. An excellent way to minimize your business’s risk of loss—in addition to strong security policies and employee training—is by having a solid cyber liability insurance policy.
Cyber insurance protects your business by providing liability coverage in the event your business is found negligent for releasing personally identifiable information (PII). Certain policies also provide coverage for businesses that expose PII via paper files (e.g. the cleaning crew accesses a filing cabinet and steals names, birthdates, SSN, etc.).
If your data is lost or stolen, it can be difficult and costly to restore. And if others are involved, such as customers or employees, they could sue your business for damages. In the U.S., the average data breach in 2019 cost a company $8.19 million. Without cyber insurance, you could lose your good reputation and possibly even your business.
A standard business liability insurance policy may or may not include basic cyber liability coverage. If your business stores PII for customers, employees, or vendors, ask your business insurer if you need to purchase cyber insurance separately to ensure you’re well protected.
Who needs cyber liability insurance?
If your business uses technology that stores sensitive information either on the device itself or in the cloud, you need cybersecurity. In today’s world, that pretty much means every business.
Let’s say someone hacks into the system that contains your employees’ and customers’ personal information, including social security numbers, credit card numbers, dates of birth, etc. An event like this can put others at serious risk.
Cyber insurance will help cover the costs of any legal fees, recovering personal identities, and paying to repair damaged technology.
You need cybersecurity if…
- Your system stores or handles sensitive information.
- You don’t have enough savings to cover the cost of a cyberattack.
- Confidentiality is imperative to your business.
- You have a business website.
- Your online store or website collects login information.
- You use third-party vendors.
- Your employees use their own devices for work or work from home.
- Your business is on social media.
- You’re at risk for extortion.
- You have no idea what you’d do if you faced a cyberattack. (With cyber insurance, you have someone to call right away to answer all of your questions!)
What does cyber insurance cover?
Cyber insurance policies usually include first-party and third-party coverages. First-party coverage helps pay for expenses that your business incurs directly from a cyberattack. Third-party coverage helps protect your business from claims others bring against you, such as a customer who sues you after experiencing identity theft.
First-Party Cyber Insurance Coverage
Your policy can help pay for
- Costs to repair damaged hardware/software
- Fees to recover or replace data
- The loss of transferred funds
- Extortion money
- Lost income and other expenses that result from business interruptions
- The cost to notify others about the breach
- Reputation management expenses
- The cost to protect your reputation (for public relations, marketing)
- Credit monitoring and ID theft repair for affected parties
Third-Party Cyber Insurance Coverage
Your third-party coverage can help cover
- Network security and privacy liability
- Electronic media liability
- Lawyers’ fees
- Other court costs
- Fines from regulatory organizations that oversee data breach laws
- Crisis communication
What does cybersecurity not cover?
Make sure you fully understand what your policy covers and what it excludes. Here are some common types of business insurance you may need, in addition to cyber liability, for full protection.
- General liability insurance (for property damage or bodily injury)
- Professional liability insurance (for mistakes or omissions)
- Commercial property insurance (for your physical location and equipment)
- Employment practices liability insurance (for harassment, wrongful termination, discrimination)
- Commercial crime insurance (for criminal activity)
If you’re worried about your lack of cybersecurity and would like to learn more about how to protect your business, contact Coverage Direct.