Posted By Pablo Conde on April 12, 2014 in Business Insurance
Pablo Conde

What is Cyber Liability Insurance, and Do You Need It?

What is cyber liability insurance and do you need it

Is your business prepared for cyber threats?

It’s quite possible that you’ve never even heard the phrase “cyber liability insurance.” If that’s the case, you’re not alone. A number of people who own their own businesses have never heard of it, either.

Cyber liability insurance covers you in the event of loss of employee or customer data. Normally, this kind of loss is not covered by a typical business insurance policy, although some policies provided limited coverage for data loss.

Why is more thorough coverage so important? We live in a day and age when data security threats face us on all sides. There are a number of companies that are household names, including Dropbox, eHarmony, Target, HootSuite, and LinkedIn that have all been recent victims of one kind of cyber attack or another.

Those are typically companies with resources to spare for high quality data security. Yet, their virtual walls were still scaled by the enemy. If you own a small business, how much more vulnerable do you think you are?

If you’re responsible for a business with database records of customer information, employee information, or, most importantly, customer credit card information, then you should settle for nothing less than state-of-the-art security. Additionally, you should also cover all the bases with a cyber liability insurance policy.

If you think that your business might be immune because it doesn’t have the notoriety of some of the other businesses that have recently been the victims of cyber attacks, think again. A recent study conducted by the U.S. Secret Service in conjunction with Verizon Communications, Inc. shows that more than 72% of all data breaches occurred in small-to-medium sized businesses.

By the way, the average cost of a breach is 5 million dollars. How does cyber liability insurance sound now?

If you still think it’s too expensive, keep in mind that there are some things that you can do to lower your premiums. First of all, ensure that you have the aforementioned state-of-the-art security policies in place. One of the ways that you can do that is by insisting on strong password protection for all of systems. Many data security breaches occur because passwords were not encrypted or changed periodically.

What is cyber liability insurance and do you need it

Many data security breaches can be traced to poor password policies

There are several other things that you can do to help reduce the premium. These include: conducting regular risk assessments, producing written IT security policies, using anti-virus software, and implementing firewalls.

Cyber liability insurance may seem like a novelty. However, if you have it when you need it, you’ll be glad that you did.