Cybercrime has risen more than 300% since the beginning of the COVID-19 pandemic1, and with more companies moving to cloud systems and remote working environments that doesn’t look like it will slow down anytime soon. That’s why you must adopt necessary measures to protect your business from malicious cyber players. One of these measures is to have Cyber Liability Insurance (CLI).
Cyber Liability Insurance (CLI) covers the financial loss that results from cyber events such as data breaches. However, cyber liability is not typically included within general liability insurance and must be purchased separately. Also, each company offering a policy has different coverage options available and exclusions included.
Why Invest in Cyber Liability Insurance?
Experts estimate that the damage inflicted by cybercrimes will add up to about $6 trillion globally in 2021.2 That’s higher than the GDP of the world’s third-largest economy, Japan, which sits at $5.38 trillion.
These statistics stress why SMBs in particular must have cyber liability insurance:
- Over 40% of cyberattacks target small businesses.3
- Over 60% of SMBs have experienced a cyberattack in the past 12 months.4
- Over 45% of SMBs say that their processes are ineffective at mitigating attacks.5
Having cyber liability insurance could be the difference between your business sinking or staying afloat after a security incident. Without cyber liability insurance, the various expenses you might have to bear after an incident could financially harm your business in the short term or, in the worst case, result in permanent closure.
Here are a few expenses that a business would have to manage following a severe data breach incident:
- Cost of downtime
- Cost of investigation
- Cost of recovering data
- Cost of legal procedures
- Cost of notifying stakeholders about the incident
- Cost of restoring the personal identities of those affected
Good cyber liability insurance would usually cover these expenses. But always remember that before you commit to a policy, you must get clarity from your insurer about what they do and do not cover.
Does your business need it? Any venture with cyber exposure must consider having cyber liability insurance. However, if your business handles or stores sensitive information online, such as electronic protected health information (ePHI) or personally identifiable information (PII), cyber liability insurance should be your top priority.
Make sure your cyber liability insurance has the following essential coverages:
First-party coverage:
- Network security and privacy liability: Covers breach response costs like forensic investigations, public relations, credit monitoring, legal fees and fines/penalties
- Business interruption losses and extra expenses: Covers lost revenue and added costs to continue business
- Digital data recovery and cyber extortion expenses: Covers losses such as ransom paid due to ransomware
Third-party coverage:
- Cyber liability: Covers claims of lawsuit expenses resulting from breaches in client systems or networks
- Media liability: Covers claims of libel, copyright/trademark infringement, etc., resulting from media use
Cybercrime coverage:
- Covers losses from digital theft of money or securities and social engineering fraud
Who Are the Top Cyber Liability Insurance Carriers?
Finding the right cyber liability insurance provider is not easy. While most general insurance providers offer general liability coverage, for cyber they will often attach a rider which is insufficient in most cases. You will want to ask them for comprehensive cyber liability coverage. We recommend choosing an insurance provider rated ‘A’ or higher by the most reputable insurance rating agency.
Simple Systems works closely with Data Stream Insurance who can help you find the best insurance for your business. Check with your current insurance provider or consider one of the following ‘A’ rate carriers:
- Chubb
- AIG
- Travelers
- AXA XL
- AmTrust Financial
- Co-Operators
But remember, just committing to a policy is not enough. You will also have to track/measure compliance with the agreement to make sure your contract is always valid, and will therefore, pay out in the event of an issue.
Having the right partner by your side simplifies this process.
Whether you are looking to find a cyber liability insurance policy that is right for your business or trying to find and measure your policy’s compliance with cyber liability insurance contracts, we are here to help.
If your Utah business needs help navigating cyber liability insurance, feel free to contact us now and we can help find the right policy for you! Simple Systems is an IT company in Salt Lake City offering Managed IT Services and Cybersecurity for Utah businesses.
