Does Your Business Need Cyber Insurance?

Does Your Business Need Cyber Insurance? 1

When dealing with security matters, some small business owners are still stuck in the past. While they have alarms and security cameras in place and lock the doors every night, they still lack in an important area – cybersecurity.

Regardless of the size or industry, cybersecurity should be a top focus. For example, in January 2019 alone, over 1.76 billion records were compromised due to data breaches.

While some business owners may think only large businesses are targeted, this isn’t the case. Because of this, now is an important time for small business owners to consider cyber insurance.

Are you unsure if this is necessary for your business? If so, keep reading. Here you can learn more about cyber insurance and why it may be a smart investment.

What Is Cyber Insurance?

Before diving into what cyber insurance covers and if you need it, it is good to learn more about what it is.

As the name implies, cyber insurance protects against cyber risks. It is mainly used to help mitigate the adverse effects caused by cybersecurity incidents. This includes things like a cyber-attack, ID theft, or data breach.

This insurance can also help cover the costs of recovering from these events and helps your business cope with potential lawsuits that result from this.

You may also hear cyber insurance called cyber liability insurance, data breach insurance, cyber risk insurance, or cybersecurity insurance.

Small Businesses Are a Top Target for Cybercriminals

Many cybercriminals view small businesses as “easy targets.” This is usually because most small business owners have not protected their records and information from nefarious individuals.

With cyber insurance, you have something to augment and support your business efforts. It will help you recover if a cyberattack occurs.

Also, this coverage will provide access to financial support and expert resources through the investigation, notification, recovery, and post-recovery needs of a business after a data breach.

What’s Included with Cyber Insurance?

It’s important to note that cyber insurance is unique from other policies. Also, there will be variance between the offerings from each company. In most situations, you are given several options for customization, as well.

There are two basic types of policies, and there’s a good chance your business needs both of these. They include:

First-Party Response Policies

With this policy, you have something that covers costs related to the notification of parties regarding security breaches. It also helps rebuild your company’s reputation.

Third-Party Defense Policies

With this policy, you have insurance to cover legal expenses resulting from a cyber-attack.

If you are unsure if you need both of these, your managed IT services provider can help you decide.

What May Happen After a Cybersecurity Breach?

If you want to understand better what may happen to your business after a cybersecurity breach and by cyber insurance is important, keep reading. Here are some of the consequences that your business may face.

Business Reputation

One of the biggest potential consequences of data breaches is damage to your business’s reputation. While bigger businesses can bounce back from this type of situation, as a small business, it is more challenging.

With cyber insurance, you will have the funds and ability to win back your customer trust. Without this coverage, it may not be possible.

Stolen Funds

If your computer system is hacked by a cybercriminal and a false wire transfer is made using these online banking credentials, the bank isn’t responsible for the funds lost. This is true as long as the bank followed the right security protocol on their end of things.

Customer Financial Information

During a breach, financial information may be compromised. If this happens, your business may face significant fines from debit and credit card companies.

This is especially the case if your company wasn’t compliant with the PCI Security Standards Council guidelines.

Productivity

Without a breach response plan in place that includes cyber insurance, you may begin focusing on the breach rather than your customers. When this happens, it is your business that will suffer.

With cyber insurance in place, you can help mitigate the issues that will arise after a breach or hack. Without this coverage, you may find it is virtually impossible to recover.

Preventing Cyberattacks for Your Business

If you want to protect your small business, it is a good idea to put efforts in place to prevent a cyberattack.

Some of the best tips to use include:

  • Know the warning signs of a data breach
  • Create a breach response plan
  • Use data encryption
  • Invest in cybersecurity training for employees
  • Purchase cyber insurance
  • Create and update your cybersecurity policy
  • Know your business risks

If you want to prevent cybersecurity issues, making a plan is essential. As mentioned in the list above, purchasing cyber insurance should be a part of your recovery plan.

Purchase the Right Cyber Insurance for Your Business Needs

When it comes to cyber insurance, there are several factors to consider. Finding the right policy is necessary to minimize the risk to your business and ensure you are fully protected.

While there is no secret formula to getting the right policy, it is a good idea to review your options and find one that works for your business’s needs. Doing this will ensure your business has protection in place.

Knowing what to do is essential when it comes to cyberattacks. If you are looking for more information and resources about tech, entertainment, science, or business topics, make sure to check out the other blogs we have posted.

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