Cyber attacks on small- and medium-sized businesses (SMBs) are on the rise because they’re easy targets with lots of valuable data. Data backups can soften the impact of the attacks, but it takes more than restoring data and getting systems back online to regain the public’s confidence and get back to business as usual.
Given the prevalence and sophistication of today’s cyber crime, a data breach is all but inevitable, especially for businesses with weak cyber security schemes. In particularly effective attacks, the only thing that would save them is a cyber liability insurance coverage.
What does Cyber Liability Insurance do?
A recent cyber security report by Kaspersky found that the average cost of data breaches for SMBs is $117,000. Businesses unable to cope with the financial damage, reputational ruin, and other costs associated with a breach have around 6 months to recover before they usually go out of business.
In cases where data breaches are particularly damaging, a cyber liability insurance policy can save you from going out of business by covering the following:
- Client notifications about the breach
- Legal fees and investigation costs
- Damages for clients, especially in cases of personal data compromise
- Fines (for regulated businesses)
- Data restoration and downtime costs
Can your business benefit from it?
The short answer is: It depends.
Unregulated businesses have to spend large sums of money when recovering from a data breach, but these expenses have more to do with downtime.
Retail businesses must comply with the Department of Labor and the Federal Trade Commission, but the majority of regulations they must comply with involve basics like taxes and labor laws, and have little to do with data security breaches.
Heavily regulated industries such as healthcare, financial services, and insurance, however, have more to lose should they get hacked. They'll be held accountable not only by their customers, but by the law.
Banks must comply with various financial regulations on money laundering, terrorist financing, risk management, and data protection, and any flaws in the system could mean hefty fines. Hospitals follow myriad HIPAA regulations on data privacy, or they risk spending millions of dollars on breaches, policy failures, and settlement fines.
Needless to say, regulated businesses stand to benefit the most from having a cyber-liability insurance policy because the stakes are much higher for them in the event of a breach.
Should your company get insured?
To determine whether you need cyber liability insurance, assess your business’s risk exposure and cyber security history. If you feel your business is at risk of a major data breach, it’s time to consider looking for a cyber-liability insurance policy.
If your business is already covered under a general liability business owner’s policy, or any other insurance, check with your agent whether a cyber security-focused plan is necessary. Your company’s existing insurance plan may be enough, or it may even provide better coverage than a cyber-security policy.
Should you decide to upgrade your existing insurance plan or get a new policy, it’s best to get recommendations from Managed IT professionals who can thoroughly assess your systems, determine your risk status, and give practical advice on whether your business needs cyber liability insurance.
Here at Fluid Networks, our technicians are experts at not only keeping your systems up and your data secure, but also providing you with proper guidance in any cyber security eventuality. A cyber liability insurance may help you cover the financial losses, but there are no substitutes to cyber security protections. Let us know how we can secure your business today -- get in touch.