Do I Need Cyber Liability Insurance?
Many small-business owners assume they can get by without cyber liability insurance. Typically, this is either because they don’t conduct much business online, or because they think their business is too small to be a target for internet crime. Unfortunately, this is exactly why small businesses are so susceptible to cyber threats -- in fact, nearly two-thirds of all cyber attacks impact small to medium-sized businesses.
Cyber liability insurance is especially vital if you’re working in healthcare, retail or accounting, as these industries are some of the most frequently cyber-attacked. That said, investing in cyber liability coverage is a wise choice for any business dealing with customer payments, medical records, social security/driver’s license numbers, or any other personal contact information online.
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How Does Cyber Liability Insurance Work?
If a data breach or other cyber-threat affects your business, your cyber liability insurance policy will pay out the amount necessary to bring your company back to secure status. A decent cyber liability policy should be able to take care of:
- Legal fees and associated expenses
- Recovering any compromised data
- Restoring identities of all affected clients
- Fixing software vulnerabilities
- Repairing/replacing any damaged hardware
These are just a few of the things your cyber liability policy may cover. Many policies also provide coverage for web-media liability issues -- in other words, disputes that arise over images, videos and other media on your company website -- as well as fraud, business interruption, and more.
What Should I Look For In Cyber Liability Insurance?
Some insurance providers have only one pre-packaged policy for small-business owners looking to protect their digital assets, but others offer a variety of coverage options. Let’s take a look at the three primary types of coverage offered by cyber liability insurance providers:
- Compromised Data Protection: Includes credit monitoring for customers and public-relations services if a breach occurs.
- Identity Restoration Protection: Helps fraud victims restore their credit.
- Cyber Attack Protection: Defends businesses against viruses and targeted computer attacks, and assists with data restoration.
Your provider may bundle all of these services under one cyber insurance umbrella, or they might break them up into separate policies (like Nationwide does, for example).
When it comes to cyber liability insurance, it’s important to keep in mind that different businesses have different needs. For instance, a company that only keeps basic customer information may not require anything beyond malware/virus/hacking protection and data recovery.
However, that’s not to say that cyber liability coverage is any less important for these types of businesses. With the average cost of a small-business data breach being over $86,000, it’s advisable for any business with an online presence to consider investing in some type of cyber liability insurance policy.