For businesses, whether small or corporate, the world is a risky place. If you are a business owner, you need reliable insurance policies to protect your establishment from accidents, theft, vandalism, and natural catastrophes. You must also pay close attention to cyber threats. Below, we will explain the top 6 reasons your company should have strong Cyber Liability Insurance.
1. Your Company Will Be Held Responsible for Data Breaches
Table of Contents
Increasingly, government regulations hold businesses responsible for protecting their clients’ private information. If your company experiences a data breach, you are required to notify all impacted parties as soon as possible. In addition to the cost of these notifications, both monetary and reputational, you will be responsible for fixing remaining security leaks, providing identity theft protection for all who have been negatively impacted, and preparing for possible legal action against you.
You should be aware that even if your company does not transmit personal data over the internet, you are susceptible to data breaches of information you store on the cloud, unauthorized employees accessing such data, and theft of actual hardware.
2. Intellectual Property Protection Is Not Just for Publishers and Inventors
As long as your business has an online presence, you are vulnerable to accusations of libel, copyright or trademark infringement, and defamation. Whether your business has a corporate website, blogs, or written content, or uses social media to network and disseminate information, you face grave risks that can only be addressed by having dependable Cyber Liability Insurance.
- Important Tips When Registering a Trademark
- 6 Legal Challenges that Business Owners May Face
- How to Protect Yourself with Contractor Insurance in the United States
- 6 Most Important Legal Requirements Every Start-Up Should Consider
- 7 Things You Need to Know About Setting up Your Own LLC in America
- 6 Major Reasons Why the Occurrence Policy is Superior to the Claims-made Policy
3. Your Company is Responsible for the Unwitting Transmission of Malware
If your company is the conduit through which a virus, worm, or malware crashes a third party’s computer system, you may be liable for extensive damages, court costs, and attorneys’ fees.
Even though you were unaware of the attack or that your business suffered harm as well, you may be held accountable by one of your customers, clients, vendors, service providers, or other third parties. Having Cyber Liability Insurance is the only way to make sure your company is protected from the high cost of rectifying the situation. Preferably, if you know how to prevent legal action to be taken against you, do it.
4. Physical Damage to Computers Is Not Fully Covered by Business Liability
If your company computers are damaged or destroyed due to a natural disaster, a fire, or an intentional cyber attack, your Business Liability policy only covers hardware. Irretrievably lost data and codes must be covered by a separate Cyber Liability policy to get your company up and running after such a calamity.
5. Cyber Extortion Is Becoming More and More Common
According to the FBI, malicious cyber activity threatens public safety and national and economic security, and one of the most destructive types of business cybercrime is cyber extortion. Malicious hackers invade websites, networks, and stored data and block access for your company and often for your clients and customers.
Even worse, they demand money in exchange for the restoration of service. Cyber extortion is distressing and costly since it could result in lost income due to temporary business closure, possibly paying the hacker’s ransom, and repairing any residual damage. Most firms so far seem to find it easier to pay off their attackers than to try to find them and bring them to justice.
6. Business Interruption: The Cost of Temporary Closure
Because almost all businesses require working computer systems, damage to those systems can result in lost revenue. Whatever the reason for the interruption — server failure, physical damage, malicious hacking, or a data breach — day-to-day operations may come to a halt. Temporary closure could mean substantial losses without proper Cyber Liability Insurance.
What Cyber Liability Insurance Covers in Your Business
As with other types of business insurance, choosing the right policy for your particular company is essential. That’s why it is critical to have an insurance broker who has in-depth knowledge of the Cyber Liability policies offered by various companies. A skilled broker will provide you with the comprehensive coverage you need at the most reasonable price.
Good Cyber Liability Insurance will cover costs related to:
- Forensic investigation
- Data recovery
- Business interruption
- Hardware and software repair
- Notifications of customers/clients affected by a breach
- Hiring a public relations firm to repair reputational damage
- Regulatory fines and penalties stemming from a breach
- Credit monitoring
- Legal fees
- Extortion money
As you can see, Cyber Liability Insurance can save your business an enormous amount of money if you suffer losses related to interference with your computer use.
Unless your business is a large corporation, you probably don’t have a risk management team to analyze cyber liability risks and establish procedures to protect against them. Even if you have such a team, you will still need carefully worded insurance policies as part of your protective shield.
- 4 Key Facts About Cyber Risk Insurance in Canada
- 5 Reasons Why Cybersecurity is a Great Career Choice
- What Business Owners Should Know About Cybercrime
- How to Create a Robust Internal Cyber Security Policy in the UK
- Top 3 Cybersecurity Issues and Challenges to Watch Out for in 2023
- Product Liability Insurance: How It Works, Who Needs It & Companies That Offer It?
Understanding the Difference Between an Insurance Broker and an Insurance Agent
When seeking a well-crafted Cyber Liability insurance policy, it is wise to have an insurance broker who is knowledgeable and has a reputation for efficiency and integrity. Notably, there is a difference between an insurance broker and an insurance agent.
Agents represent insurance providers; brokers represent their clients. Brokers can offer policies from different competitive insurance companies and provide you with the best choice of cost-effective options. Agents are loyal to the particular insurance companies they represent.
A good insurance broker will know precisely which insurance policies you need to protect your company from cyber liability and how to integrate your Cyber Liability insurance with your General Liability, Employment Liability, and Business Interruption coverage.
If you want your company to survive and thrive in the current environment of data breaches and cyber attacks, you need a well-chosen Cyber Liability policy that will come through when you need it most. The best way of finding the policy best suitable for your business is to find an experienced, well-respected insurance broker in your area.