General liability, commercial property, business interruption, and worker’s compensation insurance – here are just a few of the core business insurance policies business owners are familiar with (and should have). These fundamental insurance policies cover the main components of a business, like physical assets, profits, and employees’ wellbeing.
But have you ever thought about digital assets?
Next to investing in data security and protection procedures, business owners also need to ask their business insurance broker about obtaining a strong layer of defense against cyber attacks – like a cyber insurance policy. Cyber liability insurance (or cyber insurance) covers your business’ liability for a data breach, minimizing the legal and financial impact of a cyber incident.
Does your business process and handle personal or financial information of employees, customers, or clients? If you’re a business owner, here are 7 reasons why purchasing a cyber liability insurance policy is a must.
1. Cyber insurance protects your reputation
In today’s digital era, it’s imperative for business owners to leverage technology in order to run as efficiently as possible. However, this also means your business can be easily exposed to cyber threats.
Let’s say you have an official business website where customers can inquire and avail of your goods and services online. You have pages across multiple social media channels, and business e-mails to communicate with customers. You ask them crucial information, including credit card numbers, account details, and personal information, every online transaction. You store your employees’ payroll information, including social security numbers and contact details.
Now, imagine if those accounts were hacked, exposing your client’s confidential information.
A cyber-attack threatens to tarnish not only your finances and your computer systems – but it can also tarnish your reputation. Worse, it can put your customers and/or employees at risk. Cyber insurance helps rebuild your reputation by restoring personal identities of affected parties and recovering compromised data.
2. Cyber insurance covers data breach costs
Fixing a data breach isn’t cheap – it may even be enough to make you go out of business. Cyber insurance helps by providing coverage for costs that arise from dealing with a security breach, such as notifying affected parties, security fixes, identity theft protection, recovery of compromised data, and repair of damaged computer systems.
3. It provides defense against cyber extortion
In recent years, cyber extortion has become more common and frequent. This includes delivering malware like ransomware and similar malicious software to the victim’s systems designed to encrypt data on those systems.
Attackers then demand a ransom, withhold operational and personal data, and threaten to steal or destroy them until a steep fee is paid. Cyber liability insurance helps recoup losses associated with cyber extortion.
4. Forensic support after a cyber attack
Following a cyber attack, your business will need to investigate to know the extent of the breach and what or who caused it. Cyber insurance policy can reimburse the insured for expenses associated with forensics. In addition, some policies may even provide 24/7 support from cyber specialists, which can be useful after a hack or data breach.
5. Legal assistance following a cyber attack
Your business will likely seek legal assistance following a cyber incident, which can also be expensive. Cyber liability insurance can help your business afford proper legal work.
6. Reimbursement of business interruption loss
Business interruptions aren’t just caused by damages to physical properties – operations can also be halted due to a cybercrime incident. If your business operations are paused as a result of a data breach or an IT failure, cyber liability insurance may cover your loss of income during the interruption. Your insurer may also cover expenses in the aftermath of a cyber attack.
7. Cyber insurance covers privacy liability
In the event of a data breach, businesses are required by law to notify affected parties. This, of course, may result in privacy infringement claims and associated legal costs. Cyber liability insurance provides protection from possible lawsuits, which would cost a lot of money.
Cyber liability insurance often comes as an afterthought, but it shouldn’t be. Data is worth far more than physical, replaceable assets. With this, it’s important to have the right protection in place when you need it most.
Author Bio: Carmina Natividad is one of the daytime writers for Insurance Advisernet, one of the largest and most reliable general insurance businesses in Australia, providing high-quality risk management advice for business owners. She enjoys writing practical tips and tricks, making complex finance and business topics easier to digest.