Is it Really “a Thing”?
The importance of having cyber insurance today cannot be overstated, for business owners everywhere. The average cost of a cyber incident to small businesses is over $130K in financial losses, like lost revenue and business interruption. The potential threats these cybercriminals pose is very real, and can wreak havoc on business owners, costing you tremendous legal expenses, as well. Cyber insurance coverage can help cover the losses incurred from cyber attacks.
Quick Stats
To get some perspective on the seriousness of cyber security risks to your day-to-day business operations, here are just a few facts. In a 2021 report, 86.2% of surveyed organizations had experienced a successful cyber attack. Small businesses are most vulnerable to a targeted or purposeful cyber attack. Two out of five small businesses have been victims of cyber extortion or a ransomware attack. And in 2021, a cyber attack occurred every 11 seconds – that’s nearly four times as many as in 2016.
Data Breaches
If you accept payment for your goods or services and store electronic data with sensitive customer information, it would be vulnerable if there was a cyberattack that resulted in a data breach. Cyber incidents that result in data breaches are the most common successful cyber attacks. Part of being responsible as a business owner is doing risk management, and a data security breach is a very real threat. Cyber exposures like a data breach can destroy your business’s reputation, as well.
Cyber Insurance Policies
A cyber insurance policy is an answer for minimizing cyber risks to your cyber security, such as a data breach. Underwriting guidelines permit an insurance company to add a cyber insurance policy to traditional insurance policies for business insurance, or more commonly write as a stand-alone policy. Cyber coverage helps you with the legal assistance you likely may need in case of a cyber event. There are different types of cyber liability insurance coverage.
Data Breach / First-Party Cyber Insurance Policy
A first-party insurance policy is the most common and includes:
- Investigation of the cyber attack incident
- Risk assessment of future attacks, including preventable security issues and security upgrades
- Lost revenue because of business interruption due to a cyber attack
- Ransomware attack ransoms, policy limits apply
- Costs related to notifying customers of compromised data, including exposure of their personally identifiable information
Cyber Liability Insurance Policy
So what does cyber insurance cover? A cyber liability insurance policy will cover your business in the following ways:
- All legal fees associated with the cyber security breach, including attorney’s fees, court costs, settlements, and court judgments
- Costs incurred for regulatory fines for non-compliance or resulting from regulatory investigations
More Details
In the case of a data breach, let’s say your customer whose personal information has been compromised is a victim of identity theft. This person can sue you, and if they do, your business is liable to cover these third-party costs, in addition to legal advice or even legal defense costs. Cyber liability insurance covers your business in the case of a cyber risk becoming a reality. Cyber liability coverage can put your mind at ease when an unhappy customer decides to sue.
General Liability
A cyber risk from a network security failure may render your business unable to fill contractual obligations, in which case general liability insurance coverage will be needed. Policies vary depending on the insurance company and depending on your digital assets you can adjust policy limits on your business liability coverage.
Cyber Liability Does Not Cover
Cyber liability coverage excludes intellectual property infringement issues, but you can get intellectual property insurance. It does not cover infrastructure failures, or anything to do with internal technology systems.
Blue Oak Technology Solutions
For questions regarding any of this, contact your off-site IT department here at Blue Oak Technology Solutions. We can help you decide what’s best for you and your company, and choose the right provider for your needs. Your business security is important to us, and we can monitor your system as part of our monthly managed services. Cybercrime is a huge risk to small businesses today. Don’t make the mistake of thinking it won’t happen to you! Call Blue Oak Tech and let us help you make sense of all your options. We want to see you succeed!
Cyber Threats Are Real
Services
Some of the services we provide are things like email hosting and email archiving, wireless solutions, cloud-based solutions, system security services, software and hardware products, equipment acquisition, IT support when you need it, etc. We can help you evaluate your current system and get you the things you need to build and scale your business quickly and efficiently. Contact Blue Oak Technology Solutions to see how we can help yours.
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