Is Cyber Liability Insurance Worth It?
Cyber Insurance has become a standard practice for businesses of all sizes. Especially with cyber-attacks happening around us daily. Unfortunately, smaller companies dealing with thin margins are known to mark cybersecurity as a low priority, not realizing just how costly cyber damages can be. Below we will discuss what cyber liability insurance is and if it’s worth the cost to protect your organization’s finances.
If you already have cyber insurance or you’re wondering how you can make your premiums more affordable, check out our latest blog.
What is cyber liability insurance?
Cyber liability insurance is a coverage plan that helps protect businesses from financial losses in the event of a computer incident, data breach, or cyberattack.
Cyber insurance policies typically cover costs such as:
- 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, the size of your business, the industry, and your cyber risk.
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?
In short, yes. Cyber liability insurance is essential to protect your business and everything you’ve worked so hard to create. Cyber damages are incredibly costly, especially when critical business data is lost or a company is forced to pay a hefty ransom to recover essential data to stay in business.
But why wait until bad things happen to protect yourself? Nowadays, 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 this, over 60% of small and medium businesses thought 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 ensure 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.
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