Answering your questions about commercial cyber liability insurance
- The 2019 data breach at Capital One Financial Group exposed 100 million customer records.
- The Adobe Creative Cloud 2019 breach exposed the sensitive information of 7 million users.
- A 2018 Identity Theft Resource Center report found that businesses experienced 571 breaches, exposing over 415 million employee and customer records.
You’ve probably heard about some (or all) of these incidents. These newsworthy events affected huge corporations. However, small and medium-sized businesses are not safe from cyber attacks.
If you save, store, or transfer the private data of customers or clients, you must protect that information. In some cases, federal or state laws spell out steps to take to safeguard private data.
If your company ever experiences a cyber event, it will cost money to recover. That’s where cyber liability insurance comes in.
What is cyber liability insurance?
Cybersecurity, privacy, and media liability is insurance that covers losses and damages that are the result of a cyber attack or data breach. It covers both hacking and viruses that can corrupt network systems and files.
Your general liability or professional liability policy does have some basic cyber coverage. However, any business that stores the personal identifying information of customers, clients, or employees carries a greater risk.
Personal identifying information includes:
- Date of birth
- Social Security numbers
- Bank account numbers
- Credit card numbers
- Email addresses
If you do store this type of information on an on-site or cloud server, you are at risk. Enhanced cyber liability may be necessary. In some states, it may be required.
What types of businesses need cyber liability insurance?
Any company that does business online needs cyber liability insurance. However, businesses with a traditional model can also be at risk, as well as vendors that supply services to other companies. Vendors can include HVAC companies, construction companies, electricians, plumbers, landscapers, maintenance, and property management companies.
Companies and industries that are most at risk of cyber attacks include:
- banks and financial institutions
- healthcare facilities
- retail stores.
Additionally, any business that accepts credit card or bank draft payments, either online or in-person, may carry increased risk.
What does cyber liability insurance cover?
Cyber liability coverage varies widely depending on the insurance company. It’s important to pay attention to the terms included in any plan you’re considering.
A good plan should include basic types of coverage:
- First-party coverage. This pays expenses related to a cyber event. It includes:
- Notifying customers or employees of a breach
- Repairing software or hardware
- Expenses related to PR or marketing to protect/repair your company’s reputation
- Business interruption expenses
- Additional costs such as credit monitoring services
- Third-party coverage. Covers legal costs related to lawsuits or claims. It includes:
- Breach of privacy lawsuits filed by customers, clients, or employees
- Regulatory fines
- Media liability claims related to copyright infringement, libel, or slander
- Breach of contract or negligence claims
How much does cyber liability insurance cost?
The cost of coverage varies, depending on your risk and industry.
Four factors that affect the cost of coverage:
- Coverage limits. If you have more complex needs and need higher coverage limits, your policy will cost more. This may include businesses that have multiple servers or those that store a lot of customer or client data.
- Security measures. If you have instituted cyber safety measures such as firewalls, encryption software, antivirus software, and network safety protocols, you can lower your costs. Safety protocols might include regularly updating passwords, limiting who has access to data, and regular cybersecurity audits.
- Industry. As we mentioned, businesses that operate mainly online face higher risks than brick-and-mortar businesses. Other industries like banking, investment firms, accounting, retail, healthcare, and education – which store sensitive data – will have higher premiums.
- Claim history. If you’ve made claims before, you will likely have a higher premium.
Protect your business from cyber liability
Cyber attacks are an unfortunate consequence of the digital age. Businesses that are victims of cyber thieves can spend millions in damages. They may also face legal action or lawsuits. Cyber liability insurance is something every business should consider.
Avante Insurance can help you secure cyber liability insurance to protect your company. We can also take care of a wide range of commercial insurance needs, including:
- Commercial property
- General liability
- Commercial auto
- Workers’ compensation
- Professional liability
- Employment practices
- Commercial umbrella
Contact us to talk about your commercial insurance needs and request a quote. We will ensure you have the right coverage to protect the business you’ve worked so hard to grow.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.