What is Cyber Insurance and Does Your Small Business Need It?

Recent numbers tell the story of data breaches and SMBs. The Allianz Risk Barometer says global businesses are more worried about cyber risks than even the pandemic.

So what does an enterprise do? How do they protect their hard-earned assets from a cyber attack? Or a data breach that costs?

Here are some more small business data breach statistics to consider. Cyber insurance is the answer and here’s everything you need to know to protect your business.

What is Cyber Insurance?

These policies look after your SMBs’ cyber liability for data breaches when sensitive information like customers’ credit card numbers get hacked and stolen. They look after recovering from data loss too. And repairing a computer system after cyber attacks. The cost of a data breach can be serious.

The public relations costs can be big after a cyber event. That’s why this kind of insurance company will let customers know when there has been a breach. Here are some business insurance benefits you won’t want to overlook.

Why Cyber Insurance for Small Business is so Important

Cyber coverage is vital because you don’t want to be swamped by legal fees if there’s a hack. And because the best way to protect businesses is to be proactive when it comes to cyber threats. Like a data breach.

Here are five more reasons you need to guard against these cyber risks with comprehensive policies.

• You Get Coverage For Stolen or Lost Devices: Cyber liability insurance covers tablets, mobile phones and laptops. Not just from malware-type cyber events. But from theft and loss.
• You Get Forensics: Great network security coverage can determine how bad a breach is. Forensic services can uncover cyber incidents caused by employees or insiders.
• You Get Protection From Hacking and Viruses Damage: A business interruption clause can cover lost income. Modern businesses need this cyber policy to cover compromised data too.
• You Get Theft and Data Corruption Coverage: Data recovery after a hack is essential. Especially when company data and/or customer information is affected.
• You Can Get PR Help: Good insurance policies can help rebuild your brand. Another reason to get business insurance like this.

What is Covered by a Cyber Insurance Policy?

Wondering about the specifics and the fine print when it comes to what a cyber insurance policy covers? Here are five of the big ones.

Privacy Liability Coverage

Good cyber security here defends against consumer class action litigation.

Network Security From a Cyber Attack

Cyber security insurance covers you in the event of a network security failure. Like ransomware, data breaches and other issues resulting from social engineering attacks. And other types of cyber extortion. It can also cover first-party costs too.

Media Liability

Insurance carriers and a good insurance broker suggest this when you advertise online. Covers costs when there’s intellectual property infringement.

Network Business Interruption Coverage

A system failure from bad software is covered. Get third-party coverage by a decent indemnity company when you’ve been hacked.

Errors and Omissions

Covers you when a cyber incident causes you to breach a contract.

What is Not Covered by Cyber Liability Insurance?

Like with traditional insurance policies, cyber insurers don’t cover everything. Here are some items left out.

• Loss of Future Profits. Cyber liability insurance doesn’t cover lost profits. Even when there’s been a breach.
• Loss of Value. When intellectual property is stolen and your businesses’ value suffers, there’s no coverage.
• Upgrades. These aren’t covered either. Not even after a breach.

How Much is Cyber Insurance Cover?

What cyber insurance covers is important, but it needs to be balanced with cyber insurance costs. There will be differences based on options and business size. But a respected company like Insureon brings the median cost in at $140 per month.

There are lots of variances. However, you can get $25,ooo worth of coverage for anywhere from $25 to $50 monthly.

How Much Cyber Insurance Cover Should Small Businesses Have?

How much cyber insurance coverage do you need? Enough to cover a small business from cyber exposures if:

• You are storing credit card data for customers or patients.
• You’re a business using point-of-sale systems.
• You provide hardware or software services.
• You store data on computers or in the cloud.

Many small businesses spend around $1 million. Check out these types of business insurance.

How to Choose the Right Cyber Insurance for Your Business

Here are some tips for choosing the right insurance company. Remember the cyber insurance market has a lot to sort through.

Understand Third-Party Risk

A good insurance provider deals with supply chain vulnerabilities. Check out their underwriting guidelines.

Ask About Coverage

Get the details on the cyber insurance policies. Most cover both first-party coverage and third-party damages. Ask what happens if there’s a regulatory investigation.

Find Out About Exclusions

Ask an insurance company about the term “avoidable risks” and how that applies.

Ask About Response Times

You need to be fast when there’s been a breach.

How to Get Get Cyber Risk Insurance for Your Small Business

Understanding how to get a cyber insurance quote starts with following these steps. Beyond price and policies, you need to check the following cyber security boxes.

Remember to look for what are called silent cyber clauses in traditional policies.

Forensic Expenses.

These are security controls. To find out what kind of data was compromised.

Legal Expenses

To resolve claims from things like state and federal notification breaches due to technology errors.

ID Theft Repair/Credit Monitoring Expenses

These services should be offered to affected clients. Include data restoration.

Liability Costs

There’s more to think about than just regulatory investigations. Checking this box will help with class-action lawsuits. Covering all the bases is important when you’re looking at this type of insurance.

Make sure you have all of the above in a cyber liability insurance quote.

Is data breach insurance the same as cyber insurance?

No. There is a difference you need to be aware of. Cyber insurance looks after cyber risk from first-party and third-party incidents. Data breach insurance covers damage to data.

Image: Depositphotos

This article, "What is Cyber Insurance and Does Your Small Business Need It?" was first published on Small Business Trends