Just 15 years ago, cyber insurance was unheard of in the business world. Today, as many companies’ operations completely depend on computers, having a proper coverage in the event of a cyber crime is an important security step. You watch the news, so you are aware how hackers and data breaches can inflict serious harm on large corporations, multi-national organizations, and even governments.
But small businesses are just as much at risk. In fact, almost a third of all cyber attacks are targeted at small companies with fewer than 100 employees. This is because small businesses have less resources to invest in quality cyber security and thus are more susceptible. Not only are small businesses more vulnerable to cyber threats, there are also less financially prepared to cope with the aftermath of a security breach. The resulting fallout can easily put any small business out of work, but a good cyber insurance policy can step in and prevent that from happening.
What Is Cyber Insurance for Business?
A cyber insurance policy can help deal with the financial repercussions of first and third-party cyber breaches. It refers to all instances of intellectual property infringements, as well as virus attacks or any other issues that inhibit the operations of a company and which have been transmitted through internet connections.
What Does It Cover?
If your clients’ personal data became compromised during the data breach, the cyber insurance policy will cover all costs involved in defending and settling legal claims. Furthermore, it will cover the expenses involved in notifying clients of the security breach and provide the financial means necessary to figure out what caused the problem and minimize the damage. If there’s a need to repair, replace or restore the affected systems, the insurance will also take care of that.
Because a virus or hacker attack can interrupt business operations, the coverage will also compensate for any lost revenues as a direct result. If in the meantime your business managed to unknowingly spread a virus to outside connections, or breach IP rights, the insurance will also cover any expenses and fines. And last, if your business becomes a victim of cyber extortion, your coverage will be responsible to pay any ransom demands and consultant fees.
Does a General Policy Cover Cyber Crime?
Most of the general insurance policies will only cover computer problems that have a “tangible” nature, like for instance when the computer the data is stored in fails, but not if the data is compromised by an outside entity. This means that there has to be some form of physical damage so that you can activate your coverage, and hackers often leave no physical marks. Such a significant gap in a general insurance coverage can end up costing you a lot. That’s why when getting your business insured you should ask whether the insurer also provides cyber liability coverage. Agency offer discounts for multiple policies, so you may be able to save some money.