It’s the end of the workday. You put all your valuable products out on the counter, leave the register drawer open, and keep the door unlocked on your way out. Tomorrow morning, you hope to find that your store has been robbed.
Wait, you don’t want someone to rob you?
Well, leaving your business’s data unsecured is just as bad as leaving your front door open to criminals. In 2021, small business insurance means more than physical property protection.
Cyber liability insurance is an essential addition to your suite of business insurance coverage. If you aren’t yet convinced, learn about whether you are at high risk for cyber attacks.
Small Business Insurance
Certain forms of business liability insurance are either mandatory or seriously recommended. Most business owners invest in general liability insurance, commercial property insurance, and workers compensation insurance. It’s generally accepted that physical property and employee wellbeing need to be protected.
Years ago, that would have been enough. Now, there are thousands of businesses that run exclusively online. If you aren’t an online store, you’re still most likely using technology to store data, charge customers, and keep track of employees.
Any business that handles personal and financial information should take data security seriously. This rule is especially true for anyone that works in a heavily regulated industry, such as in healthcare, finance, or education.
If you don’t want to have to financially compensate for stolen credit card numbers, personal information, payroll information, account details, and more, you will need to seriously consider business insurance benefits like cyber liability insurance.
Hesitation Surrounding Cyber Liability
Many small businesses do not take voluntary forms of insurance seriously mainly due to budget constraints and a sense of immunity. Small business owners tend to start out wanting to run on the bare minimum expenses so that they can become profitable, but don’t realize the severity of the risks they are taking. Other owners don’t believe that a cyberattack could ever happen to their business.
Unfortunately, nothing could be further from the truth. A study by Small Business Trends found that about 43% of all cyberattacks targeted small businesses. They also found that 60% of small companies closed shop within six months of an attack.
When it comes to costs, the financial damages of a cyber-attack far outweigh the costs of keeping insurance. That same study found that the average expenses of dealing with a cyberattack for a small business totaled around $880,000.
This cost includes:
- Legal fees
- Public relations services for damaged reputation
- Loss of customers
- Lost time for recovering data, changing security measures, investigating, and more
If you don’t have the money necessary to recover from a cyberattack, you need to start thinking about cyber liability right now.
What Does Cyber Liability Cover?
In the event of a cyber-attack, you need to know what expenses your insurance will financially compensate. As you do the work to hire professionals to handle legal disputes, install new data security software, reach out to customers about the attack, and more, what will insurance do?
You will need to browse different plans and read through specific policies, but in general, cyber liability may cover:
- Legal services related to meeting federal and state regulations
- Expenses related to alerting your customers of the attack
- Extortion payments in ransomware attacks to recover lost files
- Any lost income associated with the outages from the attack
- Legal fees from dealing with lawsuits from customers and employees
- Paying any fines for not following regulations
In short, cyber liability will cover any financial losses related to the cyberattack and the privacy investigations and lawsuits that follow. This coverage will not cover:
- Costs to buy new security systems
- Loss due to damaged reputation
- Loss of first-party IP
- Damages to future income
Make sure you are fully aware of what cyber liability does and does not cover before you move forward.
How Much Does Cyber Liability Cost?
Different providers will have unique business insurance costs for their plans and will offer tailored quotes depending on your business. There are some key factors that will determine how much this coverage will cost you.
An insurance company you are considering for cyber liability insurance will need to know how many customers, clients, or patients you serve. The amount of people you serve determines how much personal and financial data you have stored and how often you have new information coming in.
The cost of this coverage will also go up according to how sensitive the data is that you are storing. If you are only storing names and phone numbers, you will not be paying as much as a private healthcare practice that must follow HIPAA regulations and stands to lose very private information. Lost data that can lead to identity theft and fraud will always be much more damaging.
An insurance company will also look at the history of claims from your company for other damages. If your business has a history of filing claims for serious damage, they will raise your rates because you will be flagged at a higher risk for repeat claims.
Finally, the insurance provider will consider how much revenue you have coming in. If you are a company with a lot of financial information from many clients who pay a good amount of money, it is riskier for insurance to cover you.
If you go years without claims, some providers will lower the cost of paying for the insurance, so this is something to consider as well!
Find The Right Cyber Liability Plan Now
Are you ready to protect your business and customers with small business insurance? Get started today by looking for the right cyber liability plan. EPG Insurance can be your partner in comparing insurance plans while keeping your needs in mind.
You can receive a quote right now, just fill out this online form!