Why Your Small Business Needs Cyber Insurance
Sometimes small-business owners feel invisible compared to more established brands. But when it comes to cyber crime, your business is just as visible — and vulnerable — as any Fortune 500 concern. Nearly one-third of all cyber attacks in 2013 targeted companies with fewer than 250 employees.
Not only are small-business owners less likely to have the resources to put sophisticated cyber defenses in place to protect their and their customers’ data, but they are also less likely to be able to absorb the financial impact of such crimes. That’s where one of the latest offerings from your insurance agent — cyber insurance — may come in handy. Many of the larger insurance carriers now offer this coverage to help you protect your business from the ravages of cyber crime.
The biggest mistake you can make as a small-business owner “is thinking, ‘I don’t need this,’ and, ‘It’ll never happen to me,’” says Claire Wilkinson, former vice president of global issues at the Insurance Information Institute and editor of Terms and Conditions, the institute’s blog. “Cyber attacks targeting large companies may dominate the news headlines, but for a small business, cyber attacks can cause huge financial and reputational damage.” Roughly 60 percent of small businesses hit by a cyber attack will close within six months, Wilkinson says.
What Cyber Insurance Can Do For You
Cyber insurance is designed to help you deal with the negative ramifications of having a web presence. Some policies offer safeguards against viruses and hacking, and others might even cover liability for problematic web content, such as a defamatory blog post.
Additionally cyber insurance can help by:
- Mitigating risk in your web security profile through periodic reviews and other assistance.
- Reimbursing costs associated with an attack, such as hiring additional staff to recover from the attack, and other related expenses.
- Providing business interruption protection if cyber crime impacts your cash flow.
- Covering legal fees in the event of litigation or paying judgments if you lose a court case stemming from a cyber crime.
What to Look For
As with any insurance policy, cyber insurance can be tailored to meet your needs. Wilkinson says you should consider including coverage for “the most common cyber risks, such as loss/theft of confidential information, corruption of data, and especially loss of business income as a result of an attack.”
She says third-party cyber liability coverage for defense costs, judgments and settlements you might incur in the event a customer brings a claim against you for a data breach is another “must-have.”
Rebuilding your reputation in the wake of a cyber attack can be a huge challenge, Wilkinson says. “Owners may want to talk with their agent about coverage that addresses crisis management. This would cover the costs to retain public relations assistance or advertising to rebuild a company’s reputation after an incident.”
To determine the best coverage for you, talk to your insurance agent. Review your existing policies, consider your level of risk, and then decide what cyber insurance coverage you need.