It might feel like cybersecurity risk is only for the big companies; after all, they’re making headlines. According to the Cybersecurity and Infrastructure Security Agency (CISA), there’s a ransomware attack every 11 seconds. To make matters worse, 43% of cyberattacks target small businesses.
Commercial auto, property, and liability insurance are the staples of every business risk portfolio — most owners wouldn’t consider doing business without them. A hack can be just as devasting as a fire. Yet only 17% of small business owners reported having cyber liability insurance, according to a November 2021 study by Advisorsmith.
The expense of restoring corrupted computer files, replenishing lost income due to business interruption, and paying ransom demands is enough to throw profits into a downward spiral. Add in the cost of notifying clients about the breach, credit monitoring, inevitable lawsuits, federal and state fines, and a tarnished public reputation — and you’ve got a recipe for bankruptcy.
Reboot your risk management portfolio and discover how cyber insurance can protect business income and help you recover after a cyberattack.
Even a Minor Data Breach can Ruin your Business
If a breach exposes personal data, you could be required to offer free credit monitoring services for one year. Credit monitoring services can cost $10 to $30 a month per individual, which adds up.
For example, suppose you’re liable for the breach of 2,000 accounts. In that case, the cost to comply with credit monitoring services starts at $240,000. Since cybersecurity and data protection laws exist in nearly every province, credit monitoring isn’t something you can ignore. If you have international clients or vendors, your risk just got riskier. Most countries have cybersecurity legislation, which means more penalties and the added complication of international lawsuits.
Even if you escape a lawsuit, the out-of-pocket cost of credit monitoring services and government fines could devastate your business.
What does Cyber Liability Insurance Cover?
Some insurance companies distinguish between cyber liability and data breach insurance, but often it’s just a difference in terminology. Cyber liability insurance covers things like:
- Customer notification of a data breach (legally required in most states)
- Reputational damage and public relations (support from experts who understand the process)
- Legal defense costs (when clients or vendors sue you for exposing their data)
- Civil damages and settlement awards (as a result of the lawsuits)
- Costs to repair damage to computer systems and networks (reimburses the cost for tech expertise)
- Free credit monitoring for affected customers (most states require it)
- Charges to recover encrypted data (tech assistance to reclaim lost data)
- Cyber extortion and ransom demands (covers ransom paid for the code to unlock your data)
- Ransom negotiations (help from experts who have done it before)
- State and federal fines and penalties (fees vary based on the state you’re in)
- Computer fraud (coverage kicks in when a computer is used for information theft, denial of service schemes, or hacking)
- Loss of transferred funds (money transferred to an impostor)
- Loss of revenue and business interruption due to a cyberattack (when your website, network, or computer records are inoperable and you temporarily close to repair them)
- Dependent business interruption system failures (if other networks or vendor networks go down and you lose business because of it)
- System failures of outsourced providers (if your vendor or partner providers are compromised)
- Betterments (replaces damaged systems with upgraded systems)
Cyber Insurance for Small Business Options in Detail
Once you understand your options, it’s easier to make informed decisions. Take a deeper dive into the cyber liability pool with the information below.
The Cost of a Cyber Policy
Cyber liability insurance is priced based on your business risk exposure. Companies that process payment information or store personally identifiable information are at the higher end of the price spectrum. Cyber insurance is highly customized, so you can design coverage to suit your needs and budget. Depending on the deductible and your business risk rating, you could get $1 million in coverage for less than $2,000 per year. Not too bad when you weigh it against the cost of mandated credit monitoring services.
Cyber liability insurance responds to many interrelated moving parts, and the policies can get just as complicated. That’s where we come in. We’ll help you insure the gaps by zeroing in on your risk exposure areas and matching you with the best policy for your risk level.
About Wedgwood Insurance
Wedgwood Insurance has offices in St. John’s & Corner Brook and is Newfoundland & Labrador’s largest independent insurance broker. We provide straightforward home, auto & business insurance advice.
With over 240 Google My Business reviews, experience the Wedgwood difference with expert advice from our dedicated team. We ensure that every client has the coverage that best suits their needs through upfront complimentary consultations and midterm reviews.