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In a digital age, small businesses rely on technology to make things run smoothly and connect with their customers. And although increased integration with technology provides several benefits, it also exposes your business to the serious threat of a cyber breach or data theft.
Have you protected your small business from cyber threats with cyber insurance? If not, you should consider doing so. Just one data breach can negatively impact your bottom line, reputation, and customer relationships.
Curious how cyber liability insurance can protect your business from cyber threats? Let’s discuss.
What is cyber insurance?
Cyber security insurance was created to shield your small business from the financial repercussions of a cyber intrusion or breach. Most cyber policies will include both first-party and third-party liability coverage, offering protection to both the small business as well as its customers.
Today, cyber crime is not only on the rise, it’s now the most lucrative criminal industry in the world, with profits exceeding $1.5 trillion.1 You might assume that only big businesses are at risk for targeted attacks, but that isn’t correct. In fact, small businesses are more likely to be targeted for a security incident. But why? In most cases, hackers view them as easy targets since they tend to have fewer security measures or response plans in place.
Technology evolves and progresses constantly, but so do the cyber threats your small business faces.
So, as time passes, hackers and the tools they use become more sophisticated in order to keep up with intelligent security defenses. With cyber insurance, you have a way to mitigate your risks and the potential backlash of a cyber breach.
What does cyber risk insurance cover?
Cyber liability insurance provides comprehensive coverage for both the financial losses from a cyber event as well as legal protection from a claim. Most policies will include two forms of insurance coverage:
- First-party coverage
- Third-party coverage
First-party insurance coverage helps pay for the damages a breach or cyber intrusion causes to your business. Common losses include:
Loss or damage to data – This helps to cover the cost of replacing or restoring data that was stolen, damaged, or erased by a hacker, virus, or denial of service attack. In some cases, it may be necessary to hire an expert to help with the recovery of your intellectual property, which the policy could help pay for.
Loss of income – Should a cyber attack cause a business to shut down or lose income, the policy could help cover the associated losses.
Notification costs – Depending on the size of the breach, you may be legally required to notify your customers, authorities, and the media. Should a breach occur, the cyber insurance policy could help pay for the various costs of notifying the proper parties (as well as the cost of offering credit monitoring services).
Damage to your business’ reputation – A cyber breach could result in significant harm to your business’ reputation. Some policies provide coverage that helps hire PR and marketing experts to do damage control and repair your public image.
Ransom – If a cyber breach involves ransomware, your insurance could help cover the extortion payments necessary to convince the hackers to release the confidential data or IP.
Third-party data coverage can help you cover the costs of lawsuits and claims, as well as their resulting damages and settlements. These include:
Legal fees – Should you get taken to court over a cyber liability claim, your policy could help cover the costs of hiring an attorney for your defense.
Regulatory costs – If a regulatory agency imposes fines and penalties for the breach, your cyber insurance policy could assist with paying for these regulatory costs and proceedings.
Damages and settlements – Should the court determine that your business is liable, your insurance could help pay out the compensation to the injured parties.
Data breach insurance vs. cyber insurance
Although they provide some overlapping coverage, data loss insurance is not the same as a comprehensive cyber insurance policy.
Data breach insurance only provides first-party coverage for losses stemming from a data breach, hack, cyber theft, or a similar security incident. Since it’s meant to help you respond to a breach, it typically covers expenses such as:
- Notifying affected parties
- Hiring a PR firm
- Providing credit monitoring services
What is not covered by a cyber liability insurance policy?
It’s important to note that although cyber liability insurance can protect your business from cyber risk, it (typically) doesn’t shield you from all liability. For instance, it doesn’t cover:
- Third-party injuries
- Third-party property damage
- Advertising errors
- Professional mistakes or omissions
To protect yourself from these common types of risks, you’d need a general liability insurance and professional liability insurance policy for your incident response plan.
Protecting your small business from risk
Cyber liability insurance reduces your exposure to cyber threats. But it’s just one of the many ways you can protect your business from cyber risk. So how do you make sure that your business is protected from liabilities that a cyber insurance policy won’t cover (like third-party injury or property damage)?
For that, there’s Thimble.
We’re the smarter and simpler way to safeguard your business through all of its ups and downs. With us, your small business can purchase affordable, on-demand, and flexible general liability and professional liability policies that go by the hour, day, or month.
Getting a policy through Thimble is fast and easy. Simply download the Thimble mobile app or click “Get a Quote,” provide a few details about your business, and we’ll generate a free quote. Click to purchase and a Certificate of Insurance (COI) will appear in your email inbox immediately. That’s it—covered in 60 seconds.
The reality is that the Internet is dangerous. Data floats around on the cloud, security infrastructure is vulnerable, and hackers are malicious. Thus, it’s important that you protect your business in the case of a breach, especially if you handle sensitive client information or credit cards.
That’s why we’re here. Not only do we want to help protect your small business, but we want to teach you how.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.