Cyber liability 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.
Cyberattacks and data breaches are expensive and increasingly common. Small businesses often have weak cybersecurity, which makes them an attractive target.
A cyberattack isn't just an inconvenience – it can put you out of business. In fact, 60% of small businesses go under within six months of a cyberattack.
Cyber insurance coverage helps your business recover from financial losses caused by cyberattacks and data breaches. It can pay for credit monitoring, attorney's fees, fines, and other costly expenses.
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Cyberattacks are expensive and can take a long time to resolve. A study by IBM and the Ponemon Institute put the average cost of a data breach at $3.86 million. The average time to identify and contain a breach was 280 days.
A cyber insurance policy can pay for:
First-party coverage involves the costs that directly impact your business. It helps cover expenses when your network is hacked or your data is breached. It can help defray the costs of notifying customers and paying for credit monitoring services to those affected.
This coverage, sometimes called data breach insurance, can often be added to your general liability insurance. It’s recommended for retailers and other professionals who collect customer credit card information.
First-party cyber liability insurance can cover:
Third-party coverage is for claims made against your business by injured parties. It provides liability coverage if a client blames you for failing to prevent a data breach or cyberattack at their company. This could include the cost of legal defense and settlements.
This insurance is recommended for tech professionals, such as an IT consultant who makes software recommendations to clients. If the software they recommend is later responsible for a client's data breach, third party coverage will help cover the cost of a lawsuit.
Third-party cyber liability insurance can cover:
Verizon’s Data Breach Investigations Report found that 28% of data breaches involved small businesses. The report also revealed:
Nearly a third of data breaches in 2020 involved small businesses, yet 43% of small businesses don’t have any kind of cybersecurity defense plan and only 16% think they are at risk of an attack.
The coverage included in cyber liability insurance defrays these costs, allowing your company to survive a breach.
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.
Phishing emails, malware, security breaches, network security issues, and computer system breakdowns are just a few examples of the kinds of cyber risk that could cause serious liability or losses.
Here are a few recent examples:
In December 2019, Wawa disclosed that hackers breached its credit and debit card payment systems at all 860 convenience stores. A month later, hackers put the payment card details of more than 30 million Americans for sale on an Internet forum for credit card fraud.
In March 2020, Marriott International announced that the personal information of approximately 5.2 million guests was stolen. This included names, addresses, phone numbers, email addresses, and dates of birth.
In July 2020, hackers used the Twitter accounts of some of the most famous people in the country to tweet requests for bitcoin donations to anonymous addresses. They received more than 400 responses and stole bitcoin worth $121,000.
In November 2020, the gaming company WildWorks announced a data breach in its kid’s game Animal Jam that resulted in the theft of more than 46 million users' information.