Cyber liability insurance can pay for expenses if a small business suffers a data breach or malicious software attack, including customer notification, credit monitoring, legal fees, and fines.
When criminals infiltrate a network, steal data, or hold data hostage, the business they steal from could be held liable. A data breach at a small business can end up costing thousands of dollars in customer notification expenses, attorney's fees, and fines or settlements.
In fact, the average cost of a small business data breach is $86,500, according to the internet security firm Kaspersky Labs. The coverage included in cyber liability insurance pays these costs, allowing your company to survive a breach.
Many business owners assume hackers won’t target their small business, but a recent report by Verizon found that 61% of all cyberattacks hit small businesses. These attacks are often successful since small businesses are less likely to have a strong defense.
Hackers often target retailers, healthcare organizations, and financial service providers, but any business can fall victim to a data breach. Cyber liability insurance is a key policy for companies that handle sensitive information, work in the cloud, or operate in cybersecurity.
There are two types of cyber liability insurance. First-party coverage helps cover expenses when your network is hacked or your data is stolen. Third-party coverage offers protection when a client sues your company for failing to prevent a breach at the client's business.
Cybercrime is a multibillion-dollar industry. Security firms constantly struggle to stay one step ahead of hackers looking for lucrative victims. Even with careful security measures in place, catastrophic data breaches can, and do, occur.
Here are a few examples: