Does your cyber insurance have business interruption coverage?

Insureon Staff.
By Insureon Staff
October 8, 2015
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As the saying goes, "Time is money," and when data breaches and other issues stand in the way of doing business, this interruption adds up to real dollars lost. Find out how cyber insurance business interruption coverage can minimize the impact of an interruption.
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By now, it's not news that data breaches are expensive. You've seen the tallies of high-profile breaches splashed across headlines. You've maybe even read a blog post here and there detailing the latest breach costs for small-business owners ($20,752 and counting). And maybe – just maybe – you've also heard about cyber liability insurance, a policy designed specifically to address the financial fallout that follows a breach, such as notifying clients about the breach, bringing in IT specialists to repair the network, and hiring a PR firm to rebuild the business's reputation.

But what you may not know is that many cyber risk insurance policies offer business interruption insurance for lost income when hacks and DDoS attacks force your business to a standstill. Business Insurance states this facet of the coverage is becoming more popular because businesses depend on technology infrastructure in order to operate. These days, that describes most businesses, especially if they are home-based, are in the e-commerce industry or offer online services.

Sound like you? Let's take a look at how cyber liability's business interruption coverage may help you weather a data breach and suffer fewer losses.

When time is money, every minute matters

You most often hear about business interruption insurance as part of a commercial property insurance policy. It can help business owners recoup their lost income when they must shut down to recover after a covered property event (e.g., windstorm, theft, or fire).

It's not surprising that this coverage would find a place in the world of cyber insurance considering that more businesses are built on technology. They need their network or website to communicate with customers, fill orders, and provide services. When a data breach compromises those tools, many businesses may not have the analog resources in place to pick up the slack. Every minute the network or website is down is another sale or customer lost, and that is something most small businesses can't spare.

Then there are the added losses that accompany a breach – you may not be able to work because you're scrambling to notify customers, working with your insurance company to sort out the data breach claim, or helping a PR firm create a goodwill advertising campaign to resuscitate your reputation.

So it's good news for small businesses that more cyber liability policies are starting to offer Business Interruption coverage. It can step in when a cyber event causes a network to go down for as little as eight hours and can help pay for lost revenue (i.e., what you would have made if the event hadn't occurred) and ongoing business expenses (e.g., employee salaries and taxes).

Given that a compromised network could take weeks to repair, this coverage can be a lifesaver for a business that's already operating on a shoestring budget and doesn't have the financial cushion to cover a week or more of lost income. Be sure to ask your insurance agent if your cyber insurance policy has this extra protection.

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