Cyber liability insurance is an increasingly important protection for modern businesses. Here’s what you should know about it.
What Is Cyber Liability Insurance?
Cyber liability insurance is coverage that helps protect businesses’ most valuable asset—their data—from things like hacking or phishing scams. Cyber insurance also helps protect against other financial problems, such as the recreation of lost data due to corruption or a ransomware attack from bad actors.
Is Cyber Liability Insurance Worth It?
Cyber insurance is worth it if your business uses or relies on data, and especially if you’re storing any sensitive data. In this context, sensitive data includes things like customer names and addresses, intellectual property, credit card information, health information and anything else that could be of value and is not readily available to the public.
Businesses That Need Cyber Insurance
If you are a business owner that uses email, has a software program that you run your business on or have employees, you should talk to our agents about how Cyber Insurance can protect your business. This coverage becomes even more critical if you store, either on your own servers or in the cloud, any sensitive customer information.
Why do Businesses Need Cyber Liability Insurance?
The main reason that businesses need cyber insurance coverage is the cost of a data breach. For small businesses, the cost of data breaches is around $36,000 to $50,000. Larger companies can see losses into the millions. If you have the right cyber insurance policy, it will provide protection to those individuals whose data was breached as well as money for your business for lost income as a result of lost or ransomed data.
Businesses also face losses outside of the obvious costs. Data breaches can result in losing customers, and the rippling effects mean that smaller businesses can even go out of business after a data breach. Cyber liability insurance can help cover these losses and give you time to get back on your feet.
Types of Cyber Liability Policies
There are two main parts of cyber liability policies: first-party and third-party. A comprehensive cyber liability policy will provide both.
First-Party
First-party cyber insurance benefits protect your income and expenses as a result of attacks on systems you own. First-party coverages include things like the loss of income if you have to shut down temporarily due to a data breach. They will also pay for forensic IT professionals to clean up and restore lost or corrupt data. Additionally, the policy will give you access to attorneys and public relations firms specializing in helping businesses recover from a cyber incident.
Third-Party
Third-party coverage provides liability protection for you if you have a breach that results in the lost sensitive information of others. A good cyber insurance policy will set up a call center and credit monitoring services for all affected individuals. It is the part of the policy that defends you in the event of a lawsuit brought by someone whose information was compromised while in your care.
What Is Covered by Cyber Insurance?
What is cyber insurance going to cover, you ask? Most policies cover the following areas.
Data Restoration
Professionals can often restore data lost during cybercrimes, even if hackers try to delete it from the hard drive. Data restoration costs can be significant if you have a lot of data to recover.
Extortion
Extortion occurs when cybercriminals threaten to release or destroy sensitive data unless you pay them. Cyber liability policies can help negotiate, pay the ransom or pay to restore your data without paying the extortion amount requested. In the event of a large breach, the experts paid for by your insurance will even work with the FBI to report the event.
Loss Of Income and Expenses
Loss of income and additional expenses often happen after cybercrime or a loss of data. This is one of the main reasons to get a cyber liability policy.
Loss From Corrupted or Stolen Electronic Data
Loss from corrupted or stolen data is different from extortion or data restoration costs. This covers most other losses directly linked to cybercrime.
Notification Services
Every state has different laws governing when and how a business that has suffered a breach must notify partners and customers. A good cyber liability policy will have experts available on standby to help you understand the legal requirements of the situation and then set up call centers and credit monitoring for those affected individuals.
Crisis Management and Reputation Management
Crisis and reputation management are largely customer-focused activities. Done correctly, these can limit the loss of customers and even earn you new ones. This is especially valuable for helping you stay in business after a hack.
Fines and Fees From Regulatory Organizations
Regulators, both governmental and otherwise, may fine you as a penalty for failing to prevent cybercrime. Cyber liability insurance typically covers these fees for you.
Negligence Claims
Negligence claims can come from anyone you worked with, including customers, if they think you did less than you should have and choose to bring a lawsuit alleging your negligence.
Libel, Slander, Defamation, Copyright Infringement, and Other Media Liability Claims
Finally, your company may face assorted claims from anyone who suffered as a result of the data breach.
What Is Not Covered by Cyber Insurance?
What does cyber insurance not cover? In most cases, it doesn’t cover any of the following.
Injury and Property Damage
These usually aren’t caused directly by cybercrime, so they’re outside of the scope of cyber insurance.
Property Loss
Similarly, cyber insurance doesn’t cover physical property loss. Note that this is not the same thing as digital property loss, which cyber insurance does cover.
Crime
Like property loss, this refers to crime beyond the areas that cyber insurance covers.
Expenses That Exceed Policy Limits
Cyber insurance does not pay for any expenses that exceed policy limits.
Additional Terms
Finally, cyber liability insurance generally doesn’t cover any costs not specifically listed in the policy.
How Much Does Cyber Insurance Cost?
Is cyber insurance worth it? We think so. The actual costs will vary based on different factors, but smaller businesses often pay less than $150/month for this coverage.
How Much Cyber Insurance Do I Need?
This is one of the first things people ask after, “who needs cyber insurance?”. Smaller businesses usually need up to $1 million in coverage, while larger businesses typically need $5 million to $10 million.
How Doyle & Ogden Can Help
As one of Michigan’s most recognized insurance agencies, Doyle & Ogden can give you a cyber liability insurance quote that meets your company’s needs and budget.
Protect Yourself From Cyber Security Breaches
Don’t expose yourself to a business-ending cybersecurity breach. Contact us today with questions or begin your quote to get a cyber liability insurance cost that’s affordable for your business and offers peace of mind against this increasingly common risk.
