Insurance 101: Cyber Liability

Today's age, in which technology runs so much of our world, opens up a whole new set of digital risks that we may not have considered a few years ago. With so much of our communication, transactions, and storage of information done over the internet, we must take the time to ensure that it is safe. 

This is especially true of businesses that store other people's information like customer data and employee data. So if you run a business, Cyber Liability insurance should be one of the top insurance policies you consider investing in. 

Years ago, business owners were limited in their options when it came to purchasing Cyber Liability. But now, most commercial insurance-focused carriers have this policy available, and it can be quite affordable. 

What Is Cyber Liability Insurance?

Regardless of how big or small your business is, you face some cyber risk, and understanding the risks associated with a cyber breach is just as important as insuring them. The most typical cyber liability risks include privacy, operational, and security issues. A Cyber Liability insurance policy will cover these risks using a mix of coverage solutions, including network security and privacy, business interruption, and media liability.

1. Network Security and Privacy: This part of digital protection covers your business in case of a network security issue, which can include information breaches, malware, digital coercion, ransomware, or compromises of your business emails. Expenses associated with network security include legal fees, investigations, any ransom negotiation, restoring data, notifying impacted clients, and providing identity theft and credit monitoring to those affected.  
2. Business Interruption: Does your business rely heavily on technology to continue to conduct business? That answer is likely yes, especially since so many companies have gone remote to some extent in the wake of COVID-19. Ensuring that any Cyber Liability insurance policy that you purchase has Business Interruption is critical because if your business is unable to operate due to a breach, as it will cover your business income and expenses that you would have otherwise received if you could still operate. 
3. Media Liability: If you do any digital advertising, then Media Liability is vital for your business and can be included in most Cyber Liability insurance policies. In addition, intellectual property infringement that happens due to your advertising is protected with this coverage for circumstances where someone claims you infringed on a copyright, certain forms of intellectual property, or generally caused financial injury through something you have published. 

What's not covered?

Now that you understand what will be covered by Cyber Liability insurance, it is just as crucial that you know what isn't. You should always be sure to read your policies to be aware of all of the inclusions and exclusions because no policy covers everything, and there will always be gaps, whether big or small. Cyber Liability insurance will not usually cover any future losses, like additional expected revenue or growth, any reduction in value if your intellectual property is stolen, or any cost to improve your hardware or software capabilities. 

Who needs Cyber Liability?

Small business owners are conscious about where their profits are going, investing back into their organization, their employees, and services or products. While they center around developing their business and producing income, it can be easy to overlook a fundamental part of being successful in the long run – digital protection through Cyber Liability insurance. Small businesses are frequently prey for cybercriminals since they may have less security compared to larger organizations. 

Did you know that an average cyber-attack on a business can cost almost a quarter-million dollars? Without a Cyber Liability policy, your business would be stuck paying for these damages out-of-pocket. Is that something your business could afford? If not, Cyber Liability insurance could be a wise investment. 

How much does Cyber Liability cost?

When it comes to Cyber Liability insurance, the good news is that so many insurers offer it now that you can shop around for the best coverage. Pricing is dependent on many factors. Some of these factors include:

• Annual revenue – how much your business makes is a factor that insurance carriers use to determine the cost of your premium. 
• Business size – larger companies may have increased liability, which could contribute to the price of a policy.
• Information you store – indeed, a company storing social security numbers and financial data will have a more considerable risk than a business that only stores names and mailing addresses. 
• Security measures – if you have quality cybersecurity measures in place and provide training to your employees regularly on best practices, you might end up with a discounted rate. Also, if you have had claims in the past, this could count against you when it comes to pricing. 
• Policy limits – the limit you choose on your policy, most commonly between $1,000,000 and $5,000,000, will influence the price as well as any applicable deductible. 

The bottom line

Ultimately, no matter the size of your business, Cyber Liability insurance can help protect all your hard work. If pandemic has taught us anything over the last year, it's that companies should always be prepared for the worst. When it comes to risks from cybercriminals, Cyber Liability is the only commercial policy that can protect against claims related to data breaches. 

When looking for the right policy, make sure you use a platform that can provide you with multiple free quotes from different carriers. And, if you still have questions, reach out to a licensed broker to help walk you through the process.