If you own a business, you need insurance coverage. Liability insurance, property and casualty insurance, worker’s compensation and employee health and welfare insurance are a few of the most common. They offer protection from all sorts of catastrophes that could result in financial ruin.
The digital age has made another type of insurance a necessity. Cyber liability insurance is especially important for retailers or anyone doing business online that requires accessing and storing large amounts of personal and financial customer data. It protects a company against hackers mining for customer’s names, contact information and social security numbers.
A loss of information is bad enough. Hackers can leave behind worms and viruses that disable websites, putting a company out of business. You don’t have to be a large, multi-national company to need this type of insurance. Even small companies can be the victim of a cyber-attack. Even a few days without the ability to make sales can seriously impact a small company and send online shoppers elsewhere. An article in Inc. Magazine, “5 Reasons You Should Have Cyber Liability Insurance,” spells out five reasons why even a small company would want to get this insurance now.
How much does a company need, and how much will it cost? Since Cyber insurance is a new product, there is a lot of variation in price. Policy design is only limited by how much protection you need and what you are willing to pay for it.
Policies offer what is referred to as “first-party coverage.” This pays for business interruption, the cost of notifying customers and even for the PR needed for damage control to restore confidence and trust between the company and its customers once the company has been hacked. This is even more important for small businesses without deep pockets to carry them through before things get up and running again.
Large companies may have risk management teams or whole departments that analyze the company’s risk exposure and recommend fixes to protect the company from harm. Small companies don’t. Insurance brokers dealing in cyber liability insurance may be able to bridge the gap by suggesting ways to protect the company against attack, like installing a firewall or putting company policies into place. Just like health insurance wellness programs and preventive care helps people stay well and reduce costs, some preventive measures to protect against cyber-attacks may prevent costly claims.
Even if you use a third party, like storing data with a cloud provider, you’re still liable. Your cyber liability insurance can protect you from liability even if your data storage provider doesn’t have the same measures in place.
If it’s been 50 years since there was a hurricane or flood in your area, you probably aren’t worried about flood damage. Homeowners who suffer flood damage often think they are protected because they have homeowner’s insurance. The same is true for risk of a cyber-attack. Most companies think they’re too small, or the risk is so far removed to justify the investment. They say an ounce of prevention is worth a pound of cure. Hackers are working hard to steal your data. Cyber insurance may not stop them, but it can help your business recover from a sneak attack.
Photo Source: Wylio.com
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