You may be thinking no, because you have a small business, but actually you could be exactly what cyber criminals are looking for. Data breaches and other cyber crimes are becoming way too common, for even small businesses. Researchers have found that more than half of cyber attacks hit small-midsized businesses.
How much could this cost your business? One report estimates a small business data breach is $86,500.
If your small business accepts credit cards, stores customer information, or conducts business online, you’re prime target for hackers, which is why you must have a strong defense.
What is Cyber Liability Insurance?
Cyber liability insurance is needed for small businesses for protection in case of a data breach or cyber attack. Cybercriminals can get inside a network and hold hostage data and sensitive personal information, making the company that they steal from liable for the incident.
Cyber liability then comes into play to sometimes pay for fines, legal fees, customer notification and credit monitoring after a business experiences a cyber breach.
Cyber Liability Insurance Covers:
There are two primary types of cyber liability insurance- first-party and third-party. You may need one type or both types, depending on your needs.
- Third-party coverage covers the incident in which a customer or business partner sues you for allowing a breach to occur. Judgments, civil awards, or settlements you’re legally obligated to pay after a data breach, electronic media liability (including infringement of copyright, domain name, trade name, service mark, or slogan on an intranet or Internet site), potential coverage for employee privacy liability as well as network security and privacy liability.
- First-party coverage may cover legal and/or forensic services to analyze the breach, notification of affected customers and employees (costs such as letter preparation and mailing), customer credit and fraud monitoring services, public relations and crisis management to educate customers about the breach and rebuild the reputation of the business, business interruption expenses (costs for additional staff, rented or leased equipment, or use of third-party services.)
Minimizing Your Cyber Liability Exposure
Possibly the worst part of a cyber breach is the loss of your reputation. If a customer’s information is compromised, chances are they will opt out of doing business with you in the future. And if word gets around, you will likely lose potential customers. The negative impacts of a data breach have a spiral effect.
We advise you to think of cyber liability insurances as a last resort of defense. Be proactive and put plans into place to reduce the likelihood of a data breach before it happens.
- Keep all sensitive information locked away with passwords or even physical locks to keep ALL files and data safe. Make them accessible to ONLY people that need them to do their jobs.
- If your employees work remotely, limit their use of portable technology and provide them with virtual private network connection for access to company computers.
- Provide extensive training to employees for proper care and control of customer data. Document these processes to ensure employees understand the sensitivity and liability related to customers’ personal information.
Does my general liability policy include cyber liability?
General liability insurance covers bodily injuries and property damage resulting from your products, services or operations. Cyber insurance is often excluded from a general liability policy, but can become an add-on.
On a side note, cyber liability and privacy insurance is often confused with errors & omissions (tech E&O) insurance. However, tech E&O coverage is intended to protect providers of technology products and services, such as computer software and hardware manufacturers, website designers, and firms that store corporate data on an off-site basis. Nevertheless, tech E&O insurance policies do contain a number of the same insuring agreements as cyber and privacy policies.
Call us to speak with a real estate expert more about this type of coverage for your business!