Cyber Liability Insurance

 This insurance covers a company in the event of a data breach in which sensitive customer information is leaked. These policies cover expenses, such as notification costs, credit monitoring, fines and penalties, defense costs, and loss resulting from identify theft.

Companies can face hefty fines and expensive legal settlements in such cyber liability cases - not to mention losses resulting from the damage to a brand’s reputation.But this problem isn’t just for major companies. Your small business could also face cyber risk.

That’s why we have Cyber Insurance coverage, which protects businesses from the increasingly sophisticated and complex threats that are prevalent in today’s tech-driven society. 

Cyber Insurance coverage can cover a broad range of information security-related claims, including data breaches, network failures and media or content liability.

Many small business owners dismiss this insurance as something that only big companies have to worry about. The truth is, however, that there are thousands of small businesses handling sensitive information that could be exposed, leaving them liable to numerous claims. All it takes is one breach, whether it’s as sophisticated as a hacking or as simple as an employee's laptop being stolen, to cost your business seriously.

Any business that handles sensitive customer information, like credit card numbers, is at risk. If it happens to you, a breach or network failure could wind up costing your small business to the tune of hundreds of thousands of dollars.

Furthering the case for Electronic Data Liability Insurance, most states in the U.S. have laws that make data breach notification mandatory. Notification can quickly become very expensive, especially if you need to communicate with thousands of customers via mail, making this type of insurance an affordable way to comply while mitigating costs. As data breaches become more and more common, this insurance will grow to be just as vital to small businesses as policies that protect them from things like fires, floods and vandalism incidents.

This type of insurance comes in handy if your business...

• Collects payment information for online sales
• Maintains a database of personal information on current, past or prospective customers
• Stores information on employees digitally, including social security numbers or medical information
• Relies heavily on technology for daily operations
• Is located in one of the 46 U.S. states with mandatory data breach notification laws

For this type of coverage, first-party coverages are typically offered as sublimits of liability. What this means is that only a small portion of your total policy can be applied to certain cost areas. While historically these sublimits have been small (for example, a $100,000 sublimit for regulatory fines and penalties as part of a $5 million policy), they have recently expanded. In most cases today, your business will be able to apply up to 50 percent of the total policy limit to first-party costs, and some markets will even offer blanket policies with no sublimits. It’s important to read the wording of your policy carefully to ensure you will be covered for all the costs you may incur.

Additionally, there are often time-related limits written into these types of policies. That means your network could have to be down for a certain specified number of hours before business interruption coverage would kick in. If it’s only down for an hour, you’re likely not going to be able to make a successful claim.

Electronic Data Liability Insurance is often added to a Business Owner’s Policy, which can make it more affordable as part of the bundle. However, many small businesses also purchase it separately.

But while simple policies exist, figuring out exactly what coverage your small business needs can still be tricky. Factors that you’ll need to consider include:

• Your business’s size
• Your industry
• Your level of exposure
• Your business model

There are different levels of service you can choose from when selecting a policy. These will affect the cost of Cyber Insurance. For example, some will provide you with a point person who will handle your claims from beginning to end, while others will have you manage claims individually and leave you free to choose which services you want to utilize from a list of suppliers they work with.

Small businesses can implement security controls to reduce their risk and therefore their premiums for this type of insurance. These controls can range from installing advanced security software to implementing internal procedures for handling customer data and providing a virtual private network, or VPN, for remote employees to access company servers. It’s also important for small businesses to conduct regular security audits, as well as train employees on how to protect valuable and sensitive customer information.

Additionally, some policies will offer reduced premiums for each year your business does not have a claim. This can be helpful, particularly when factoring in other expenses, such as the cost of General Liability Insurance.

As businesses become more and more reliant on technology, it’s time to face the fact that data breaches and network security issues are only going to become more prevalent. As a small business owner, you don’t want to get stuck with the bill.

Not only that, but in times of crisis, your immediate actions can make or break your future success. Swift action is necessary to prove to your customers and stakeholders that you’re remedying the situation.

Purchase an insurance policy and rest easy knowing that in the case of a cyber liability incident you’ll be able to focus on what’s most important (repairing your brand’s reputation and its relationship with customers) instead of worrying about how you’ll pay for things like court fees and notification costs.