The number of businesses purchasing Cyber Liability Insurance is on the rise. According to Entrepreneur, Cyber Insurance customers used to be concentrated in a few fields: tech, financial, and healthcare. It makes sense – those industries have obvious data security risks. But now businesses large and small are jumping on the Cyber Insurance wagon. Why? Because data thieves don’t discriminate.
Why Small Businesses Are Buying Cyber Liability Insurance
According to the Entrepreneur article, there are two types of customers driving Cyber Liability Insurance sales: current customers who are adding more coverage and new customers, including small businesses. Several factors spur business owners to purchase coverage:
- Visible threat. Target. P.F. Chang’s. Without even trying, you can probably tick off several major data breaches that have happened over the last few years. In the past, cyber attacks seemed like an abstract concept, but now, the threat is real. Entrepreneur reports that one study found the average cost of a data breach increased from $5.4 million in 2012 to $5.9 million in 2013.
- New cyber crime regulations. Most states now require businesses to notify customers when data breaches reach a certain size. Notifying every customer that could be affected takes a lot of time and money – two things that most small-business owners don’t have to spare. The appropriate Cyber Liability Insurance policy can take on this expense for you.
- Customers want it. The small business profiled in Entrepreneur’s article purchased Cyber Insurance because its customers were asking about it. If it’s important to a business’s customers, it’s likely important to the business, too.
- Small businesses are targets. For every big breach you hear about on the news, there are several smaller breaches that target smaller businesses. Entrepreneur notes that most data breaches are crimes of opportunity. According to a cited study, a business with less than 10,000 records is more likely to be attacked than one with more than 100,000 records.
Why Are Small Businesses Targets of Cyber Crime?
While it’s true that small businesses are helping fuel Cyber Liability premium sales, one fact remains: most small businesses aren’t familiar with data security threats and take very few steps to protect the sensitive information stored on their networks.
A recent LA Times article outlines how and why small businesses are targets of cyber crime:
- They don’t understand their enemies. It’s not just faceless hackers that are stealing small businesses’ data. Data breaches can occur at the hands of wayward vendors, employees gone rogue, and common computer thieves.
- They don’t realize anyone can be attacked. The LA Times notes that California businesses are required to notify the attorney general’s office if more than 500 Californians are affected by a data breach. At the time of publication, over 380 of these notifications had been filed since January 2012. Who sent these letters? Dentist offices, colleges, wineries – you name it. Every business is a potential target.
- They don’t bother with cyber security. As the article mentions, 8 million businesses accept credit and debit card payments, but most don’t bother with recommended data security protocol. Many small businesses don’t even use strong passwords or antivirus and antimalware software – and they only become aware of a breach when a customer reports fraudulent activity. They also tend to use the same computers for business and personal activities (such as browsing Facebook), which could leave them vulnerable to threats.
What Can Small Businesses Do to Mitigate Cyber Risk?
Now that you know your small business could be the target of a cyber attack, there are a few things you can do. First, get to know the basics of cyber security. Check out the FCC’s tips for more information.
But because you can’t prevent every data breach, you can also jump on the bandwagon and purchase a Cyber Liability Insurance policy. This coverage protects you from the most common expenses that occur after a data breach, including…
- Lost accounts / revenue.
- Contacting customers.
- Credit monitoring.
- Marketing efforts.
The good news? Cyber Liability Insurance premium prices are declining because so many businesses are adding the coverage to their business protection plans. Fill out our online insurance application to find out how much you can save on Cyber Liability Insurance.