Is cyber liability insurance worth it?
Is cyber liability insurance worth it?
It’s one of the most common questions we get from our clients at Network Computer Pros.
“Hey, the other day I saw something about cyber liability insurance. What exactly is it—and do I need it?”
I always start by reminding them that I’m an I.T. administrator and not an insurance agent—but I’m happy to share my thoughts on what it is, what it covers, and whether I recommend getting it.
What is cyber liability insurance?
Cyber liability insurance covers any costs that might come up after a data breach or cyberattack.
Those costs might include:
- Data recovery expenses when vital business-related data or software is damaged or destroyed
- Ransoms paid to regain access to data in a ransomware attack
- Lost income if your business is temporarily shut down due to a cyberattack
- Regulatory fines handed down by state and federal agencies
- Crisis management and PR when trying to maintain or repair your reputation
- Customer notification expenses as well as the cost of credit monitoring
- And, of course, the legal fees that arise without fail when responding to an attack or a data breach
What is cyber insurance?
It’s the same thing as “cyber liability insurance,” but with a different name, as per the provider.
How much does cyber insurance cost?
The cost of a policy will vary based on several factors, including the type and amount of data you process, as well as the size of your business.
The specifics of what’s covered vary by provider. However, when buying a policy, you can often customize it by adding riders to cover additional concerns. Any riders you add will affect the total cost of your policy.
However, it’s important to note that the monetary costs of a data breach or cyber attack are only one piece of the bigger picture. Damage to your reputation can have untold costs down the road, but no insurance plan can cover that.
What is the difference between cyber insurance and data breach insurance?
Some insurance providers, such as The Hartford, offer a product called “data breach insurance,” which is intended for smaller businesses. Data breach insurance specifically covers costs related to stolen or lost data, such as credit monitoring and notification.
But data breach insurance won’t cover other types of issues, such as extortion fees due to ransomware, or lost income from network outages.
Damage to your reputation can have untold costs down the road, but no insurance plan can cover that.
Does cyber insurance cover phishing?
You’ll need to carefully review the specific policy you’re considering to see if it covers phishing. (And if it doesn’t, your provider may offer a “social engineering” rider that includes phishing coverage.)
There have been instances where businesses believed they were covered in case of a phishing incident. But when they filed a claim, they learned that their insurer’s definition of phishing was extremely narrow, and their claim was denied.
If you’ve read through the policy you have in mind and are still unclear on what it covers, you may want to consult with your insurance agent or even your attorney.
Do I need cyber liability insurance?
I’m not going to tell you that you shouldn’t buy insurance. In fact, I think it’s essential. You need to protect your business and everything you’ve worked so hard to create.
But why wait until bad things happen to protect yourself?
In this day and age, ensuring that your company has a robust cybersecurity plan should be on the top of your list.
Let’s look at some recent data on the cost of cyberattacks:
- In 2020, there was a seven-fold increase in ransomware attacks. And those ransomware payments? They increased 33% in 2020—pushing the average payment over the six-figure mark.
- A report by Verizon showed that in 2019, 28% of data breaches involved small businesses.
- Over 60% of small and medium businesses reported that they had undergone a data breach in the previous 12 months.
- Despite all of this, over 60% of small and medium businesses thought that their companies weren’t likely to be targeted by cybercriminals.
As you can see, hackers, viruses, ransomware, and email scams are on the rise—no matter the size of your business.
At Network Computer Pros, we take a proactive, layered approach to keeping you safe.
We make sure that those critical Windows updates get installed (better yet: it happens while you’re sleeping).
We install advanced firewalls and cutting-edge, cloud-managed anti-virus protection.
We set up spam filters as well as multi-factor authentication for tools you rely on to run your business.
Insurance is excellent; never having to use your insurance is even better.