With data breaches on the rise, it’s more important than ever for business owners to protect their companies from cyber threats. Getting hacked is more than an inconvenience – cyberattacks can cause serious financial losses and reputational damage that could take years to recover from. Even more alarming – small businesses are particularly vulnerable and may not be able to recover from even one incident.
Thankfully, business owners have a valuable tool: cybersecurity insurance. This type of policy protects your business against potential costs associated with a data breach or other digital security compromise. While insurance may not be perfect or foolproof, having some form of coverage has numerous benefits if your organization experiences an attack.
How does cyber liability insurance protect a business? Let’s take a look at what is covered under a cyber liability insurance policy, what is excluded, and how to procure the best policy to meet your needs.
What Is Covered by Cybersecurity Insurance?
As technology advances, so do cyber threats. Hackers are creative and consistently find new ways to infiltrate a business. That’s why it pays to invest in cyber liability insurance to protect your business from potential losses or liabilities due to malicious online activity.
Every cybersecurity policy is different and features different types of coverage that address risks and potential losses. Here are the main types of coverages included in cybersecurity insurance policies and how they can help keep your business protected:
- First-Party Coverage: First-party coverage covers losses incurred directly to your business. Coverage typically includes losses caused by malicious attacks, accidental data breaches, and other cybercrime activities. It provides coverage for security breach expenses: forensic investigations, ransom attack payments, loss of income, legal defense and settlements, public relations assistance, and customer credit monitoring.
- Third-Party Coverage: Third-party coverage provides coverage for security breach defense expenses, compensatory damages, settlement, and legal fees associated with defending a lawsuit.
- Cyber Crime: This type of insurance provides coverage for loss of money or digital currency directly resulting from cyber crimes such as social engineering, reverse social engineering, and fraudulent transfer of funds. It also provides coverage for charges incurred by the insured from its telecommunications provider as a result of a telecommunications hack.
- Network Business Interruption Coverage: Does your company rely heavily on technology for its day-to-day operations? Network business interruption coverage addresses the “downtime” after a cyber attack and covers costs related to lost profits, fixed expenses, and other related costs.
If you own a business that operates online – which is likely – consider investing in cyber liability insurance. We can help you evaluate your data liability risks and find a policy to meet your needs.
What Isn’t Covered by Cybersecurity Insurance?
While cyber liability insurance can help protect your business from most consequences after an attack, it does not protect you from everything. As with most types of business insurance, there are some exclusions including:
- Property Damage: In general, cyber liability insurance will not cover property damage expenses after an attack. For example, if your computers are fried during an incident, your cyber liability policy will not help with any expenses. The good news is your commercial property insurance covers property damage.
- Intellectual Property: Intellectual property is usually not covered under typical cyber insurance.
- Crimes of Self-Inflicted Cyber Incidents: No policy will protect a business from an intentional, self-inflicted cyber attack.
- Potential Lost Future Profits: While cyber liability insurance can protect your business from the loss of business interruption, it does not protect you from the loss of future profits.
- Cost of Improving Technology Systems: After an attack, your business will likely want to put measures in place to protect from future attacks. Your insurance policy may not cover expenses to upgrade software, equipment, or other technologies to improve your incident response plan.
Cybersecurity Insurance Policies for Your Business
At Christian-Baker Company, we understand the diverse challenges a business owner faces including cyber risks. Cyber attacks can result in large, unexpected costs, not to mention business downtime and lost revenue. For businesses that aren’t prepared, a cyber attack can even permanently close a business. Let us help you protect your business from a cyber attack.
With more than 50 carrier partnerships, our team can help you find the best cyber liability insurance policy for your business. As an independent agency, we provide concierge-level service for our clients and work hard on their behalf to get the best coverage at a competitive price. Contact us today either online or by calling our office at 717-761-4712 to learn more about cyber liability insurance.
