What is cyber liability insurance? – Forbes Advisor

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According to the US Small Business Administration (SBA), small businesses are an attractive target for cybercriminals because they have sensitive information and typically lack the security infrastructure of a large enterprise. This includes your customers’ personal information, such as credit card numbers and social security numbers.

According to a recent SBA survey, 88% of small business owners feel vulnerable to a cyberattack. If your business is a victim of cybercrime, recovery costs can be high, including specialized repairs and legal fees.

To get the best small business insurance policy, you might want to purchase cyber liability insurance.

What is cyber liability insurance?

Cyber ​​liability insurance protects your business against the cost of cyber threats or breaches involving computer systems and data. This may include sensitive customer information such as credit card numbers, social security numbers, account numbers, medical records, and driver’s license numbers.

Cyber ​​liability insurance is also known as cyber security insurance or cyber risk insurance.

What does cyber liability insurance cover?

Cyber ​​liability insurance covers damages suffered by your company due to a computer security breach.

These costs include items such as investigation services, data recovery and identity recovery. Data recovery covers the costs of recovering your data following a breach. Identity Recovery pays for the costs and services required to gain control of your identity information following identity theft.

Cyber ​​liability insurance also covers the damage suffered by your customers or business partners as a result of the cyber attack. These damages include things like legal fees, customer notices, and settlement fees.

“Cyber ​​liability insurance can cover costs and expenses related to a number of cyber threat scenarios, including, for example, suspected network intrusions and threats of cyber extortion, data breach , network or security wrongdoing, denial of service, and network outage situations,” said Bryan Smith, vice president of product management at The Hartford.

Cyber ​​liability insurance can also cover:

  • Ransom payments you need to make to regain access to your data
  • Customer and employee lawsuits over privacy breaches
  • Loss of revenue due to network outages
  • Regulatory fines
  • Public relations costs to restore your company’s reputation after a data breach

What is not covered by cyber liability insurance?

It’s a good idea to review your cyber liability insurance policy for any exclusions. Here are some examples:

  • Intentional acts. This includes fraud, criminal conduct or knowingly wrongful acts committed by you or your employees.
  • Previous acts or knowledge. This includes claims of which you were aware before your coverage began.
  • Subsidiary out of your control. This may include any incident encountered by a subsidiary for which you do not have majority ownership or management control.
  • Penal procedure. Your policy may not cover claims brought in the form of a criminal proceeding, including a criminal action, criminal investigation, or grand jury proceeding.
  • Interruption of activity of systems under the control of third parties. Your policy may not cover business interruption costs resulting from a failure of the computer system belonging to a third party, except for interruptions covered by a failure of the dependent system.

Types of potential cyberattacks

A cyberattack on your business could mean:

  • Data Breaches. Breaches occur when critical information is stolen, such as personal financial information.
  • Computer attacks. In this type of cyberattack, your computer system is hacked and compromised.
  • Cyber ​​extortion. Thieves can demand ransom payments during an extortion threat against your company’s computer system.

Who needs cyber liability insurance?

Any business that stores or processes sensitive information should consider cyber liability insurance. Consider coverage if you store data such as customer names and addresses, social security numbers, medical records, and financial information such as credit card information.

Here are some examples of businesses that could benefit from a cyber liability insurance policy:

  • accountants
  • Advisors
  • Contractors
  • Hair salons and barbers
  • IT services
  • Marketing companies
  • Real estate agents
  • Restaurants
  • Retailers

How much cyber liability insurance do I need?

The amount of cyber liability coverage you need depends on your specific business risk. It’s a good idea to speak with your insurance agent to determine the appropriate amount to meet your business needs. Here are some questions to consider:

  • Does your business collect, store, send or receive personally identifiable information or personal health information?
  • Does your business operate in an industry subject to customer information rules, such as education, finance, or healthcare?

How much does cyber liability insurance cost?

The median cost of cyber liability insurance for small business owners is $140 per month, according to Insureon. Your costs will depend on several factors, including:

  • Your company’s exposure to cyber risk
  • The amount of insurance coverage your business needs
  • Your business income
  • The security of your network
  • The number of people who have access to your systems and data
  • Your claims history

Cyber ​​liability covers for small and large amounts are available. A small cyber liability insurance policy could be added to a business owners policy. A broader cyber liability policy with higher limits deserves its own standalone policy.

What is the difference between data breach protection and cyber liability insurance?

Data breach insurance will help your business if sensitive financial data is exposed during a data breach. Additional coverage can be added to Data Breach Insurance, such as Business Revenue Insurance, which helps replace lost revenue if you are unable to run your business due to the data breach. .

Cyber ​​liability coverage is for larger companies that need more cyber protection. This insurance helps large companies respond to cyber attacks and, most importantly, recover from cyber damage as a business.

Cyber ​​liability insurance vs technological errors and omissions insurance

Technology errors and omissions insurance is a type of professional liability coverage that will cover damages caused by errors in your company’s technology products and services.

Cyber ​​liability insurance, on the other hand, covers the costs of cyberattacks outside your business.

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