And 60% of those who suffered a cyber attack or data breach go out of business within 6 months, yet 75% of small businesses do not carry Cyber Liability Insurance, according to Small Business Trends.
While almost half of data breaches are intentional, malicious attacks, it’s not all cyber extortion and ransomware like some TV dramas would have you believe. Bad actors often gain access to computer networks because of employee negligence (such as opening an email that contains malware) or by security gaps in third-party applications. And there are other forms of data loss risk – misplaced and stolen devices, software glitches, physical damage to computer systems through fire or flood – that could disrupt your normal business activities and cause a huge financial blow.
Security and Privacy Breaches: Who Is At Risk?
You should invest in Cyber Liability insurance if your company:
Communicates via email, text, social media
Accepts credit card or electronic payments
Promotes your company via a website or social media
Stores company data on a network (such as sales reports, payroll, intellectual property)
Stores data that belongs to others (such as employees, customers, tenants, patients)
Sell products or services through a website
Has employees who remotely access your system
These activities could expose Personally Identifiable Information (PII), such as social security numbers, dates of birth, credit card numbers, usernames, billing addresses, and so on. Even very small companies likely engage in at least one of these activities.
Business owners rate cyber attacks as one of their top concerns, but very few companies have taken basic action to prepare. Learn some best practices for protecting your company from a data breach. Poor password management is one of the most common ways that data is compromised.
Types of Cyber Risk Insurance
Cyber Liability insurance isn’t one-size-fits-all. There are policies covering different aspects of the data protection and recovery process, and you can customize it based on your company’s needs.
Generally, cyber risk insurance covers you on two fronts: lawsuits against you by those whose PII was compromised, and the expenses related to handling the data loss. Those expenses might include:
Cost of repairing the system and restoring the data (Network Asset Protection)
Cost of forensic investigation, notifying customers, call center support (Breach Support and Crisis Management)
Cost to provide credit monitoring for those affected by the breach
Regulatory fines and penalties
Loss of business revenue due to shutdown of computer systems (Business Income and Extra Expense; this is not usually covered by Commercial Property insurance)
Just as a medical office’s computer network differs greatly from that of an auto parts store, so too should their Cyber Liability coverage.
Technology Errors and Omissions Insurance
Though Cyber Liability policies may include some of the same types of coverage, it is not a substitute for Technology Errors and Omissions (Tech E&O) insurance.
Tech E&O is intended for businesses that provide technology-related products and services, and it covers claims made against the business for failures or errors in those products and services.
In contrast Cyber and Privacy Risk policies cover claims made when data has been lost or stolen. Due to rapid changes in technology, this area of insurance is continuously evolving, so please contact us if you’d like to discuss your business’s exposures.
Doesn’t My Commerical General Liability Cover This?
The short answer is no. Most Commercial General Liability (CGL) policies have cyber exclusion clauses in them.
Get a Cyber Liability Insurance Quote!
Most small businesses are concerned about data security but almost none of them allocate any resources towards risk mitigation. It’s not just your business you’re putting at risk, but your employees and customers too! Call Banas & Fickert at 413-527-2700 to speak with an agent about adding a Cyber Liability policy to your CGL or Business Owners policy.
Banas & Fickert Insurance Agency
63 Main Street
Easthampton, MA 01027