As technology rises in use, businesses are using digital means to send, receive, or store data more and more. Much of this data is essential and can include sales projections, tax records, contingency plans, and other company documents.
However, can advancements in technology keep these files safe from hackers and people who can use them for fraudulent purposes? Businesses can protect themselves from the costs associated with data breaches by purchasing a cyber liability policy.
The Purpose of Cyber Liability Insurance
Cyber liability insurance covers financial losses brought upon by data breaches and other cyber events. Policies may vary as more insurance agencies offer cyber coverage uses systems they’ve developed themselves. However, most policies include first-party and third-party coverages.
First-party coverages pay any expenses that a firm directly incurs after a breach. Meanwhile, third-party coverages apply to damages or settlements businesses are obligated to pay after claims have been made or suits have been filed for damages that result from the company’s failure to protect data.
First-Party Coverages for Breach
Cyber liability policies cover various costs and expenses after a data breach. Through reimbursement, first-party coverages are those paid for charges covered by the company right after a breach.
Coverage includes data restoration, loss of income and extra expenses, cyber extortion, notification costs, and crisis management. Most small businesses pay an annual premium of $2000 or less for a cyber liability policy.
Third-Party Coverages for Breach
Meanwhile, inevitably, affected customers will not file a lawsuit or claim after their date has been compromised. These charges may incur additional costs for companies as some may require a certain fee to cover damages brought by the cyber attack. However, companies shouldn’t worry as cyber liability policies also cover this aspect.
Policies cover network security and privacy liability, electronic media liability, and regulatory proceedings. It usually covers damages or settlements and defense costs that may be covered within the limit or in addition to the limit.
What Cyber Policies Don’t Cover
Although most policies cover many costs for companies that subscribed to them, there are still claims that they do not cover. Some include bodily injury and property damage, intentional dishonest acts committed by the insured, war and terrorism, contractual liability, and utility failure.
Why Should You Get a Cyber Liability Insurance?
Small businesses are often easy targets for cyber attacks since they have less security in place. Cyber liability insurance helps companies comply with state regulations requiring businesses to notify customers of a data breach, including personally identifiable information. It also provides companies access to expert resources and financial support for investigation, notification, recovery, and post-recovery activities linked with the event.
Conclusion
As small businesses grow, they should invest more in their consumer’s security and protection. Subscribing to a cyber liability policy may be an added cost on their end, but it’s a necessary expense that may bring in more people supporting the brand. People are keener on services that care for their customers. Therefore, knowing that a policy protects them will make them feel safer.
However, businesses should also be observant of the early warning signs of a data breach. Owners should prepare a plan and a response on how to address a possible attack. Meanwhile, employee training should include notes on cybersecurity, hacking trends, and prevention. It’s also important to pay attention to unique risks your organization may face based on the industry you’re in.
Quesurance is an independent insurance agency that offers various types of insurance policies. From auto insurance to home insurance, we’ve assisted our customers with all their needs. We believe that there is an insurance fit for everyone’s needs. Get a free consultation by signing up on our website today.
