Small and medium-sized businesses are increasingly vulnerable to cyber attacks and would greatly benefit from having cyber insurance
- A 2019 report found that 43% of cyberattacks targeted small businesses
- Smaller businesses often lack a cybersecurity strategy
- They have trouble securing adequate cyber protection
- Small and mid-size businesses are more vulnerable to social engineering and wire transfer fraud
- They are often targeted to gain access to a large organization
Many people predict cybercriminals only target large corporations, organizations, or retail chains. If you share this belief – and you own a small or medium-sized business – it could end up costing you. A 2019 Verizon Data Breach Investigations Report found that 43% of data breaches were done on small businesses.
Small and medium-sized businesses are uniquely vulnerable to cyberattacks actually. What makes small businesses such a prime target? We look at five common reasons and explain why cyber insurance is a necessity in today’s digital world.
Reason #1: Lack of a cybersecurity strategy
Companies with less than 50 employees often lack any kind of cybersecurity strategy. Less than half of these businesses use cybersecurity software. Very few small and medium-sized businesses (SMBs) have a cybersecurity expert on staff, let alone a dedicated IT department. Plus, the effort to educate employees about safe Internet practices is often lax.
Reason #2: Lack of cyber protection
Small businesses are generally not equipped to handle the most common types of cyberattacks, such as phishing schemes, malware, and ransomware. They might have antivirus or anti-spam software, but it rarely covers all forms of attacks. Such software may not even be installed or used properly.
Reason #3: More vulnerable to social engineering schemes
Social engineering is a type of cyberattack that manipulates users into sharing confidential information or wiring money to fraudulent accounts. Small businesses often don’t have the basic security to combat these attacks, such as two-factor identification. Also, employees are rarely given the proper training to combat these threats. Finally, SMBs may work with many third-party partners that primarily use wire transfers in the regular course of business.
Reason #4: Small businesses open the door to larger organizations
Many SMBs are connected electronically to larger corporations. Cybercriminals infiltrate the small pond to gain access to the large fish at top of the food chain. It’s an easier way into the network as a whole since small businesses often have less security.
Reason #5: SMEs become collateral damage
Some attacks are carried out against companies that provide IT-outsourcing services, such as cloud services or even cybersecurity software. Any attack against these types of tech providers also involves their clients. Unfortunately, the SMB is often left footing the bill for the recovery costs.
Why you need cyber liability insurance
Cyber liability insurance is a specific type of commercial coverage that helps protect your business in the event of a cyberattack. If your business collects, stores, or transfers the data of customers, clients, employees, or third-party vendors you are vulnerable to an attack. The data SMBs use includes credit card information, bank account information, Social Security numbers, personally-identifying information, and passwords.
Recovering from a cyberattack can be very expensive. 60% of SMBs report going out of business after an attack.
After a cyberattack, you need to get your business up and running again, restore lost data, and alert interested parties about the breach. Cyber events can also leave you vulnerable to lawsuits or fines if it’s found that you didn’t have adequate safety measures in place.
What cyber insurance covers:
- Legal expenses and fees
- Notifying customers about the breach
- Restoring customers’ personal identities
- Recovering or restoring compromised data
- Repairing damaged computers and systems
Cyber insurance can also help make up for lost revenue if you’re not able to operate for any length of time.
Reasons to purchase cyber insurance:
- Most cyberattacks are not covered by standard property or crime insurance policies.
- Data is not covered by standard property insurance.
- Business interruption insurance does not always cover cyberattacks.
- You can be held liable for the loss of third-party data.
- Retailers can face penalties and fines related to stolen credit card data.
- Notifying people of a breach costs time and money.
- Helps pay for a PR firm to restore trust in your organization.
- Helps protect you from claims related to leaked information, defamatory statements, or copyright infringement made by employees online.
- Helps cover costs of a data breach that stems from a lost, stolen, or infected portable device.
Protect your business’s systems with cybersecurity insurance
It’s essential that businesses of all sizes have cyber liability insurance in today’s digital world, especially with so many employees working remotely. Avante Insurance can help you find the right policy so your business is protected. We’ll guide you through the facts you should know and how cyber insurance will cover you.
We can also take care of a wide range of commercial insurance needs, including:
- Commercial property
- General liability
- Commercial auto
- Workers’ comp
- Professional liability
- Employment practices
- Commercial umbrella
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.