Do small businesses need Cyber Liability insurance?
The outlook isn't positive for small business cyber security: 43% of phishing attacks target small businesses, and 60% of small businesses hit by cyber attacks end up going under within a year. With the increasing popularity of ransomware and computer "worms" that can spread through networks, your computer doesn't even need to have any valuable data on it to be targeted.
Given these facts, it's shocking that so many small businesses have minimal cyber security and no insurance coverage for data breach.
What does Cyber Liability insurance cover?
Like all liability policies, cyber primarily covers the legal costs related to lawsuits. If a data breach exposed your customers to identity theft or other damages, then they can sue your business. The value of this protection cannot be overestimated. The cost of a small business data breach can range from $30,000 to $50,000, much of that being lawsuit-related.
A cyber liability policy should also cover any lost revenue you experience due to the breach, such as from network downtime, data recovery time, etc. This should include the cost of an IT investigation into what caused the breach in the first place.
In addition to these protections, cyber liability and data breach coverage often includes resources and funding to guide you through your legal and regulatory obligations after an attack. Certain laws, for example, may require you to contact customers affected by the attack within a certain timeframe.
A truly great cyber liability product will also include resources and information that help you prevent a data breach in the first place, such as a diagnosis of network security, employee training materials, incident response planning, etc.
What does Cyber Liability Cost?
Cyber liability coverage, which nearly always includes data breach coverage, can often be packed into your Business Owner's Policy, saving you money. For smaller businesses that are a good fit for cyber liability, premiums can range between $800 and $1,500 annually. For businesses that deal with millions of dollars in annual revenue, the cost for a cyber policy usually starts at $10,000 minimum.