Cyber liability is a question of “When” not “If”
In an earlier blog post we discuss cybersecurity trends in 2020 and how these impact small businesses. The pandemic has influenced how we conduct business, increasing opportunity for cybercrime. As owners implement more technologies to better serve customers and manage their businesses, their risks change. More than ever small business owners need to understand and re-evaluate their exposure in this area. Business interruption, cyber extortion, and data breaches can create financial and reputational consequences that can put a small business ‘out of business.’
According to the annual Hiscox Cyber Readiness Report 2020 , ” the median cost of all cyber incidents in the US has risen from $10,000 last year to $50,000 in this year’s figures.” They go on to state that “identifying and isolating an attack keeps costs down, and the best way to do that is to enhance the cyber knowledge of the entire organization.”
This is a positive note as there are many resources and services available for business owners to strengthen their cyber resilience. Insurance companies are continuing to innovate their product offerings to help businesses in the ever-changing cyber threat landscape. Often cyber insurance policies will include access to free cyber services such as educational and employee training resources.
Cyber insurance falls into two categories: cyber liability and data breach coverage.
Cyber liability insurance covers monetary losses from a breach or cyberattack and provides legal protection. These policies are comprehensive in nature and consist of both first-party and third-party coverages.
Data breach insurance usually only offers first-party coverages that pay for losses related to the breach of your network (i.e. data destruction, extortion, online theft, and hacking) and cover expenses associated with informing affected parties. Data breach coverage is often offered as an endorsement to an existing business insurance policy.
First-party coverages include:
- Investigation services
- Costs to restore network to pre-loss condition
- Restoring data and recreating data to your system
- Lost revenue
- Notification costs
- Help line services and credit monitoring for affected persons
- Public relations services
Third-party coverages provide protection from lawsuits against you related to a cyberattack such as:
- Attorney fees
- Settlements and/or judgments
- Any regulatory fines incurred
What Is Right for Your Business?
The pandemic may have only forced the inevitable when it comes to businesses becoming more technologically connected with customers, employees, and one another. Cheney Insurance can help you assess your business’ risk and guide you in determining the right protection you need.