Cyber Liability Insurance: Who Needs It and Why

Cyber criminals are all over the Internet these days. And many of them are heavily financed and backed by large criminal organizations or even national governments. In fact, there has been extensive speculation over the past several months about the Russian government attempting to hack the U.S. presidential election.

Many major corporations have also suffered from sophisticated cyber-attacks. Target, Home Depot, Yahoo, eBay, several Federal Government agencies and numerous other entities have all fallen victim to cyber-thieves. Cyber-crime is big business. If entities spend millions of dollars a year on cyber security are not safe, then everybody is vulnerable.

Do Small Businesses Really Have to Worry about Cyber Liability Insurance: Some business owners mistakenly believe that they can fly “under the radar” and avoid cyber-attacks. While it may be true that you are not in the same category of notoriety as a Target or Home Depot, if you have a website and do any type of online marketing at all, cyber criminals can (and will) find you.

Yes, you are one out of billions of websites, but through the power of mass automation, they will locate you and initiate brute force attacks to hack into your system. In fact, this may have already happened to you without you even realizing it. So who needs cyber liability insurance? The short answer is everyone who hosts a website that interacts with the general public.

The Cost of Not Being Insured: If you do not carry cyber liability insurance, you and/or your organization are responsible for any data breaches and information leaks that may occur. Maybe you do not store bank account or credit card information on your clients or customers, but this does not alleviate your risk. Cyber thieves are very adept at taking pieces of information on a customer and putting the puzzle together.

For example, if you have customers who must set up a username and password to interact with your website, this information alone may be enough to steal their entire identity. Many consumers use the same usernames and passwords for multiple accounts to make it easier to keep track of (this is a big mistake btw), and cyber criminals are often able to take one small piece of information like this to gain access to multiple financial accounts. If the breach that revealed this data is traced back to you, your organization will be the one on the hook for damages.

What Does Cyber Liability Insurance Cover: Cyber liability policies provide extensive coverage for businesses that experience a data breach. For example, a typical policy covers sales that are lost due to business interruption, the cost of notifying your customers that their confidential data has been compromised, the cost to hire a public relations firm to manage the negative publicity, the cost of litigation and damages paid, and in many cases, the cost of government fines and penalties resulting from the breach. Your insurer may even work with you to help set up a risk management plan to reduce your chances of a data breach occurring in the first place.

How do I Find the Right Policy: Cyber insurance policies tend to vary somewhat in coverages and cost, so it is important to do your due diligence and shop around. You can save time by working with an independent insurance agent. Independent agents have access to several of the top insurers in your state, and since they are not captive to any one particular carrier, they can shop objectively for you to find the insurance plan that best fits your needs and budget.