Focus on Cyber Liability Insurance for Small Business
If you're in business, how high would you rate your chances of being
hacked? If you answered "zero" it must be because you don’t use computer
Or perhaps you're not aware that, every year, over 43 percent of all small
and medium businesses are targeted by cyber crooks. That's the word from
New York Small Business Development Center.
And that's why cyber liability protection is one of the fastest growing
sectors of the insurance market.
That -- and the fact that on average it costs $38,000 to put things right
after a hack attack. These costs are steadily rising and many smaller
businesses simply never recover from a breach.
Cyber Liability Versus Data Compromise
Although most of the cyber security insurance terms are interchangeable,
there is an important distinction that needs to be understood.
Cyber liability insurance is the umbrella terms covering all of the risks
outlined above. But it may be possible to insure against just the costs of
the loss of data -- what is known as data compromise insurance.
This is a sort of "first party insurance" -- in other words, a company buys
protection against their data being breached.
This is significant for tech companies and IT service providers, who not
only face the risk of their own systems being hacked, but also being blamed
when one of their clients' systems are breached,
These companies need to insure themselves as above but also take out
liability insurance against being sued by a client. This type of coverage
is called "third party cyber risk insurance" and wouldn’t be covered in a
data compromise policy.
And if you're not in IT but employ a contractor to provide your systems and
support, always check that they have third party cyber security coverage.
Aren't I Already Covered?
A standard commercial liability insurance policy rarely covers cyber
But you may already have a level of protection. For example, a few general
liability and some business owner's policies (BOPs), directors and officers
(D&O), tech errors and omissions (E&O) and even medical malpractice
coverage may include an element of cyber security protection.
However, it may be inadequate for today's risks and the costs of putting
things right. Or it may not be there at all. So, speak to your insurance
professional to understand what coverage you already have and whether this
should be supplemented, either within the policy or through standalone
Cyber Liability Risk Management
Reducing your cyber liability risk is often down to taking some commonsense
measures to protect your systems and the data they store.
Your risk management policy might include:
- Installing commercial-grade security software and keeping it up to date
- Installing a software or hardware "firewall" that blocks unauthorized
external access to your systems and your Wi-Fi networks
- Backing up all of your data and storing it off-site
- Limiting employee access to systems and carefully vetting those who do
have access (some data breaches are inside jobs)
- Educate all employees on the importance of cyber security. Ideally, have
a written policy that is given to all employees. Display posters reminding
employees of the risks.
- Use strong passwords that are regularly changed. Ideally, every employee
should have a unique password so you can always tell who has been accessing
your systems or who's responsible for a security breach.
Do I Really Need Cyber Liability Insurance?
You decide. But consider this:
- Over 18 million US businesses already have cyber security insurance.
- Nearly two thirds of businesses targeted by hackers are small firms.
- As recent events have demonstrated, the risk of an attack is increasing.
- So is the sophistication of criminal activity that can break through
seemingly secure systems.
- The regulatory environment is tightening -- New York state introduced new
rules this year -- and is likely to continue to do so.
- The costs of making good after a data breach are also climbing rapidly.
- The very survivability of your firm could depend on being properly
If you'd like to discuss protecting your business against cyber attacks,
please speak to the cyber liability insurance experts at
Newbridge Coverage 1-516-781-9000