The Importance of Cyber Liability Insurance
The COVID-19 pandemic has impacted everyone in one way or another. If there is one category that most benefited from the pandemic, it’s cybercriminals. That’s why cybercrime has shot up by almost 300% since the start of the pandemic.[efn_note]Entrepreneur[/efn_note] You must adopt necessary measures to protect your business from cyber attacks. One of these measures is to have cyber security insurance liability coverage.
Cyber Liability Insurance (CLI) covers the financial loss that results from cyber events such as data breaches. However, cyber liability is not typically included within general liability insurance and must be purchased separately. Each company offering a policy has different coverage options available and exclusions included.
Why Invest in Cyber Liability Insurance?
Experts estimate that the damage inflicted by cybercrimes will add up to about $6 trillion globally in 2021.[efn_note]Cybersecurity Ventures[/efn_note] That’s higher than the GDP of the world’s third-largest economy, Japan, which sits at $5.38 trillion.
These statistics stress why SMBs in particular must have cyber liability insurance:
- Over 40% of cyberattacks target small businesses.[efn_note]Cost of Cybercrime Study[/efn_note]
- Over 60% of SMBs have experienced a cyberattack in the past 12 months.[efn_note]State of Cybersecurity Report[/efn_note]
- Over 45% of SMBs say that their processes are ineffective at mitigating attacks.[efn_note]State of Cybersecurity Report[/efn_note]
Having cyber security insurance liability coverage could be the difference between your business sinking or staying afloat. Without cyber liability insurance, the various expenses you might have to bear after an incident could financially harm your business. In the short term or, in the worst case, result in permanent closure of your business.
Here are a few expenses that a business would have to manage following a severe data breach incident:
- Cost of downtime
- Cost of investigation
- Cost of recovering data
- Cost of legal procedures
- Cost of notifying stakeholders about the incident
- Cost of restoring the personal identities of those affected
Good cyber security insurance liability coverage would usually cover these expenses. But always remember that before you commit to a policy, you must get clarity from your insurer about what they do and do not cover.
Does your business need it?
Any venture with cyber exposure must consider having cyber liability insurance. However, if your business handles or stores sensitive information online, such as electronic protected health information (ePHI) or personally identifiable information (PII), cyber liability insurance should be your top priority.
Make sure your cyber liability insurance has the following essential coverages:
- First-party coverage:
- Network security and privacy liability. Covers breach response costs like forensic investigations, public relations, credit monitoring, legal fees and fines/penalties.
- Business interruption losses and extra expenses. Covers lost revenue and added costs to continue business.
- Digital data recovery and cyber extortion expenses. Covers losses such as ransom paid due to ransomware.
- Third-party coverage:
- Cyber liability. Covers claims of lawsuit expenses resulting from breaches in client systems or networks.
- Media liability. Covers claims of libel, copyright/trademark infringement, etc., resulting from media use.
- Cybercrime coverage. Covers losses from digital theft of money or securities and social engineering fraud.
Who Are the Top Carriers?
Finding the right cyber liability insurance provider is not easy. While most general insurance providers offer general liability coverage, they don’t always offer comprehensive cyber liability coverage. It is always ideal to choose an insurance provider rated ‘A’ or higher by the most reputable insurance rating agency.
The following insurance carriers are worth considering:
- AXA XL
- AmTrust Financial
Remember, just committing to a policy is not enough. You will also have to track/measure compliance with the agreement to make sure your contract is always valid, and will therefore, pay out in the event of an issue. Having the right partner by your side simplifies this process.
Whether you are looking to find a cyber liability insurance policy that is right for your business or trying to find and measure your policy’s compliance with cyber liability insurance contracts, we are here to help.
Contact us now to find the right cyber security insurance liability coverage policy. You can email us at email@example.com, or give us a call at 630.832.0075.
For more information on cyber security insurance, check out these related blogs:
Article curated and used by permission.