Now and then the media reports on a major data breach, which often results in hundreds of thousands of personal records being compromised.
These reports make it seem as though cyber criminals only target large corporations, but this is far from the truth. It’s actually small to medium-sized businesses that are targeted most often, with nearly 50% of all cyberattacks targeting SMBs. Cyber insurance can help protect against some of the damaging repercussions.
Large corporations can often recover from data breaches and damaging cyberattacks, but many SMBs simply aren’t prepared for a data breach, and about 60% usually go out of business within six months as a result.
While there are, of course, several steps you can take and cyber security protocols you can enact to reduce the risk of a data breach, investing in cyber insurance is a worthwhile expenditure offering a number of significant benefits.
What Is Cyber Insurance?
Companies often face strict fines and penalties as the result of a data breach. This, coupled with the losses a business might face after a cyberattack, can make it extremely difficult for an SMB to recover financially. But cyber insurance, also known as cyber liability insurance or cyber risk insurance, is a policy that covers much of the costs needed to ensure a recovery.
This protection has actually been available since 2005, but is now quickly becoming a necessary component of a risk management plan for businesses of all sizes.
Cyber Insurance Is Cost Effective
A cyber attack can disrupt normal business operations, and recovery costs can be quite costly. Investing in a policy is not only cost-effective, but it can also potentially cover income lost as a result of the attack, as well as any increase in expenses as part of your recovery plan.
Cyber Insurance Covers Investigation Costs
After you’ve experienced a data breach or a cyberattack, you’ll need to investigate to determine not only how it happened but also how it can be prevented from happening again. Sometimes your data can be compromised by a service you didn’t even know had your personally identifiable information.
Cyber insurance can cover the costs of an investigative team of forensic experts and cyber specialists, who can also coordinate with the FBI or other law enforcement agencies.
Coverage Is Extensive
Cyber insurance policies can be custom tailored to suit your needs and budget. As mentioned above, standard policies often account for investigation costs and income loss, but they can cover much more, including:
- Monitoring and Notification Services: Services that actively monitor your network to alert you of a potential data breach or cyberattack, as well as expenses involved in notifying customers and clients of a data breach
- Liability Costs: Legal costs related to claims by customers or clients; this coverage can be expanded to include costs for restoring credit and identities
- Data Recovery Costs
- Damage Repair and System Cleanup Costs
- Ransomware Coverage: Costs associated with having to pay a cyber criminal who has held your data captive with ransomware
- Reputational Damage: Some policies cover costs associated with restoring your reputation after a data breach
Cybercrime Is On the Rise
Last year saw cybercrime against small businesses increase by over 400%, and experts predict that number will continue to rise. While cyber security protocols can significantly reduce the risk of a data breach, nothing is 100% foolproof, and cyber criminals are constantly attempting to exploit weaknesses in software and systems.
Sometimes all a hacker needs is a password and username, which can easily be gotten via phishing emails; it’s easier than you might think for them to procure that personal information. It only makes sense to have a cyber insurance policy in place in the event that a cyberattack against your company succeeds.
Provides Peace of Mind
Along with the peace of mind of knowing that cyber insurance will enable you to financially recover in the event of a data breach, it also adds an extra layer of security and monitoring. With today’s ever-advancing technology and the sophisticated methods cyber criminals are utilizing to hack into your network, you can never have too much security.
Choosing A Good Cyber Insurance Policy
When seeking cyber insurance, look for policies that can be custom-tailored to suit your needs and budget. Costs of cyber insurance can vary depending upon the amount of liability you wish to ensure, as well as the size of your company and the risk of a cyberattack in your industry. Costs can also be adjusted if you already have good cyber security measures in place, which you should.