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Cyber liability insurance for retail businesses

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Cyber liability insurance

Cyber liability insurance, also called cyber security insurance, protects small businesses from the high costs of a data breach or malicious software attack. It covers expenses such as customer notification, credit monitoring, legal fees, and fines.

Cyber insurance covers the cost of a data breach

A data breach can be devastating for your retail store, especially if your customers' payment information is compromised. That's why businesses that store credit card numbers or other sensitive information need a cyber liability insurance policy. Cyber insurance can pay for recovery costs and provide essential support and resources.

This policy provides coverage related to:

  • Data breaches
  • Cyberattacks
  • Ransomware
  • Phishing
  • Malware
  • Denial of service (DOS) attacks
  • Other cyber incidents that disrupt business
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What coverage does cyber liability insurance provide for retailers?

Retailers typically need first-party cyber liability coverage, which provides financial protection against cyber threats at your own business. For example, it would help your store recover after a cyberattack exposed your customers' personal data.

Retailers may be able to add first-party coverage, also called data breach insurance, to their general liability insurance or business owner's policy (BOP).

Another type of cyber policy, third-party coverage, is recommended if you're responsible for another business's cybersecurity. For example, if you're hired to help another retailer set up shop and you recommend insecure software, you could be held liable for a data breach.

What does first-party cyber insurance cover?

First-party cyber insurance coverage can help pay for:

  • Notifying customers affected by a data breach
  • Providing credit monitoring services
  • Executing public relations campaigns
  • Business interruption due to cyber crime
  • Cyberextortion payments
  • Other recovery activities

Data breaches are expensive, and running a small shop doesn't mean you're safe from hackers. Small companies are often targeted by cybercriminals because they have fewer security measures in place. On top of that, simple accidents by employees – such as opening a phishing email – are the most common cyber risks.

Other important insurance policies for retailers

While a cyber insurance policy covers cyber risks, it does not provide complete protection. Customer injuries or theft can occur at any retail business. Other policies for retailers to consider include:

General liability insurance: This policy can pay legal expenses related to third-party property damage and injuries, copyright infringement claims, and more.

Business owner’s policy (BOP): This policy bundles general liability insurance with commercial property insurance, usually at a lower rate than if the policies were purchased separately.

Workers’ compensation insurance: Workers' comp is required in almost every state for stores that have employees. It covers medical costs for workplace injuries.

Liquor liability insurance: If your shop sells alcohol, you likely need this policy to comply with your state's dram shop laws and protect against lawsuits.

Commercial umbrella insurance: Similar to excess liability insurance, this policy boosts coverage on a retailer’s general liability, commercial auto, and employer’s liability insurance once the limit is reached.

Commercial auto insurance: State laws usually require this coverage for business-owned vehicles. It helps cover costs if your retail shop's delivery truck or other vehicle gets into an accident.

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