As you’re well aware, cybersecurity wasn’t on people’s minds 20 years ago, but today, cyber crimes and data breaches are all too real. Data breaches can become expensive and can deliver major headaches to everyone involved, whether it’s a major government network, a company, or an individual looking for cyber insurance for small business.
Cyber liability insurance, also called cybersecurity insurance, may step in to help combat the data breaches and cybersecurity issues or hacking that crop up. It can deliver a devastating blow to your business if you aren’t covered. We’ll define cybersecurity insurance, who needs cyber liability insurance, what isn’t covered by cyber liability insurance and more.
What Is Cyber Liability Insurance?
Federal agencies in the United States reported that in 2022, the number of cybersecurity incident reports was over 30,000, a 5% decrease from the previous year.
Cybersecurity insurance can help cover financial losses resulting from cyber events and incidents. Cyber-risk coverage can help solve the following issues related to cyber insurance for small businesses or large companies:
- Payment for legal assistance
- Crisis communicators
- Credits or refunds
Some insurance companies offer cyber liability insurance and data breach insurance, but what’s the difference? Data breach insurance helps your business respond to breaches and offers protection for small business owners, but cyber liability insurance is usually meant for larger businesses.
Who Needs Cyber Liability Insurance?
Every organization needs to consider purchasing cyber liability insurance, because businesses continue to battle more and more complex invasions. Businesses must be prepared to protect themselves ahead of the curve, rather than after an incident happens.
If your business handles a website, accepts credit card payments, or collects or stores personal information, such as email addresses, home and mailing addresses, phone numbers, or more, you should consider purchasing cyber liability insurance because you put your business at risk of experiencing a cyber attack.
What does Cyber Liability Insurance cover?
What does cyber insurance cover, exactly? Cyber liability insurance covers your business liability for a data breach involving customers’ sensitive information. Cyber liability coverage can cover any costs due to a cyber event:
- Lost income
- Costs associated with notifying customers
- Recovering compromised data
- Costs for repairing damaged computer systems
- Forensic investigations
- Litigation expenses
Let’s look at an example. Let’s say a hacker targets your business, finding email addresses of your clients, exposing private information about your clients. Your customers might sue you. Additionally, you might have issues with your company’s image after a data breach.
What Is Not Covered By Cyber Liability Insurance?
Cyber liability insurance doesn’t cover everything, and that could include covering property damage, such as replacing damaged computers as a result of cyber attacks. Other types of insurance policies will not cover cyber liability, including the following:
- General liability insurance: General liability insurance helps cover medical expenses and legal fees from bodily injury and property damage which your company could be found responsible for.
- Commercial property insurance: Commercial property insurance protects your company physically from fire, burst pipes, severe weather, theft, and vandalism. Note that commercial property insurance doesn’t cover earthquakes and floods. Those will have to go on the cyber insurance coverage policy separately.
- Employment practices liability insurance: Employment practices liability insurance can protect your company against loss if accused of wrongful employment practices, such as claims of harassment, discrimination, or wrongful termination.
- Professional liability insurance: Professional liability insurance, often called errors and omissions insurance, can protect your company if accused of negligence, copyright infringement, personal injury, and other factors.
Other aspects of your business may not be covered, so be open with your insurance company about the risks your company may face.
So, in the realm of cybersecurity insurance for business and cyber security insurance for small business, should you get it?
The small amount you pay for cyber liability insurance can be well worth the cost to avoid huge legal costs and ensure you have protection against the costs of a data breach that crop up in your business. Cyber attacks can come any time and occur unexpectedly, indicating a need for cybersecurity insurance.
Also, don’t forget to shop around for cyber security insurance coverage and cybersecurity insurance requirements and how to go about tackling cybersecurity insurance claims. Get quotes from several insurance companies before you land on the right cyber liability insurance company for your needs. You may find that your current company doesn’t offer quite the right type of insurance you’re looking for, so continue to look for the right fit. In your investigation, you might discover you need additional insurance, possibly even unrelated to cybersecurity liability insurance.
What does cyber liability limits mean?
Cyber liability policies have limits on cybersecurity insurance coverage. This means that you’ll face a ceiling of cyber liability limits. For example, your insurer might have a limit on your insurance, such as a range between $1 million to $5 million or more. Consider the limits you prefer for this type of breach and consider the ramifications if something does happen to your company.