With reports of cyber criminals increasingly focusing on smaller companies for targeted attacks, now more than ever businesses that store sensitive data need to consider how they protect their information systems.
And while you can install firewalls and take other precautionary measures, should an attack occur, you will be left facing untold costs and possible fines and lawsuits by those whose data may have been exposed. One way to protect your company is by securing a cyber liability policy.
But what does a cyber policy cover, and why should you get one? You may think an attack may never target your firm, but if it does and you are without insurance coverage, you may be sorry you didn’t act.
The following are the top 10 reasons for buying a cyber liability policy:
1. Data is a very valuable asset
Your data is almost certainly worth many times more than the physical equipment that it is stored upon.
Yet most business owners do not realize that a standard property policy would not respond in the event that this data is damaged or destroyed. A cyber policy can provide comprehensive cover for data restoration and rectification in the event of a loss, no matter how it was caused and up to the full policy limits.
2. Systems downtime is not covered by a business interruption policy
If a cyber attack, computer virus or malicious employee brings down electronic point-of-sales software or other important electronic functions, a traditional business interruption policy would not respond.
Cyber insurance can provide coverage for loss of profits associated with a systems outage that is caused by a computer virus or denial-of-service attack.
3. Cyber crime is the fastest-growing type of crime
Thanks to the internet, your business is now exposed to the world’s criminals and is vulnerable to attack at any time of the day or night.
Phishing scams, ransomware, identity theft and telephone hacking are all crimes that traditional insurance policies do not address. Cyber insurance can provide comprehensive crime cover for a wide range of electronic perils that threaten your financial resources.
4. Your company can be held liable if it loses third party information
Non-disclosure agreements and commercial contracts often contain warranties and indemnities in relation to data security that can trigger expensive damages claims if a breach occurs.
Also, consumers file suit after businesses lose their data. You can also be subject to fines for not acting quickly and notifying clients whose data may have been breached.
A cyber liability policy can help protect against these various costs.
5. Businesses face severe penalties if they lose customer credit card data
Global credit card crime is worth over $7.5 billion a year, and increasingly this risk is being transferred to the retailers whose customers’ credit card data is breached.
Under merchant service agreements, compromised businesses can be held liable for forensic investigation costs, credit card reissuance costs and the actual fraud conducted on stolen cards.
These losses can run into hundreds of thousands of dollars for even a small retailer. Cyber insurance can help protect against all of these costs.
6. Complying with breach notification laws costs time and money
Breach notification laws generally require businesses that lose personal data to notify individuals that were potentially affected.
Customers who have had their data compromised expect openness and transparency from the businesses they entrusted it with. Cyber policies can cover costs associated with providing a breach notice, even if it is not legally required.
7. Your reputation is your top asset, so why not insure it?
Although there are certain reputational risks that can’t be insured, you can insure your reputation in the event of a security breach. When your systems have been compromised, you run a risk of losing the trust of your loyal customers, which can harm your business far more than the immediate financial loss.
Cyber insurance can not only help pay for the costs of engaging a PR firm to help restore this, but also for the loss of future sales that arises as a direct result of customers switching to your competitors.
8. Social media claims are on the rise
What employees say on behalf of the company on social media can be a liability if posted carelessly. A cyber policy can cover claims arising from leaked information, defamatory statements or copyright infringement.
9. Portable device loss or theft can expose your firm
A laptop left on a plane, a smartphone stolen in a restaurant or a USB stick going missing are all examples of risks that can open your company up to data theft or stolen intellectual property.
Also, the devices themselves are being targeted, with a growing number of viruses being built just for them.
Cyber insurance can help cover the costs associated with a data breach should a portable device be lost, stolen or fall victim to a virus.
10. Small firms are increasingly being targeted
While the large-scale attacks in the news often involve big companies, small firms are also at risk and often don’t have the financial resources to get back on track after a cyber attack or other kinds of data loss.
According to Symantec’s “The Threat Landscape in 2021” report, the fastest growth area for targeted attacks is on businesses with fewer than 250 employees, accounting for 31% of all attacks.
A cyber liability policy can help protect smaller companies against the potentially crippling financial effects of a privacy breach or data loss.