In today’s digital-first climate, companies and individuals alike rely on online assets, transactions, interactions, storage, and more. With so much dependency on the cyber world, protecting it seems only natural. But today, more than half of small businesses have experienced a data breach, and very few people know much about cyber security, let alone cyber insurance. Most people think cyber insurance is solely for online retailers.
Weed Ross works with tons of insurance carriers, and with decades of experience, we’ve learned a few things about the importance of cyber insurance. Data breaches are happening increasingly often, and they pose a major threat to your business, your reputation, and the safety of your employees. Accordingly, it’s essential that we offer education and further information on the benefits and inner workings of cyber insurance. So below, we’ve outlined how cyber insurance works and what it can do for you or your business.
In this article, we will cover:
- What is Cyber Insurance?
- What Does Cyber Insurance Cover?
- Why Do You Need Cyber Insurance?
- What Does Cyber Insurance Cost?
What is Cyber Insurance?
Cyber insurance is a form of protection against data breaches that threaten you or your business’ sensitive information, such as history, transactions, Social Security numbers, credit card information, personal information, health records, banking information, and more. Sometimes referred to as cyber liability insurance or cyber risk insurance, cyber insurance helps entities or individuals recover assets that are jeopardized in online-related security breaches. Like most types of business insurance, cyber insurance is a financial product that aids in the recuperation of the monetary costs of recovering these types of data. Cyber insurance protects against these primary risks:
- Network security and privacy liability
- Media liability
- Network business interruptions
- Online errors and omissions
What Does Cyber Insurance Cover?
Cyber insurance covers a variety of liabilities involving personal and sensitive information, and a good cyber risk policy will help cover the legal fees and expenses associated with handling the cyber incident. Cyber insurance offers coverages that apply to:
- Legal fees for customer notification
- Restoring personal identities of affected individuals
- Recovering compromised data
- Repairing damaged systems
Why Do You Need Cyber Insurance?
Cyber insurance isn’t exactly a requirement, but it’s advisable for anyone with a valuable online presence. Because a good cyber insurance policy will help you recover from cyberattacks on data held by third parties, breaches of your network, theft of personal information, and more. These types of incidents occur all the time, and no one is invincible. It’s important to be proactive in these types of matters because cyber crimes are often extremely costly. Any form of business that records data or personal information online should consider cyber insurance very seriously.
What Does Cyber Insurance Cost?
The cost of a cyber insurance policy depends heavily on several characteristics of your business or online presence. The most influential factor has to do with the level of cyber risk that you’re exposed to. If you’re a simple online retailer that handles basic transactions, you are liable for minor risks. If you’re a large healthcare provider with an abundance of personal information stored in your data centers, you’re at substantial risk and need more elaborate protection. The amount and sensitivity of the data itself, the industry you’re in, the strength of your cyber security, and your annual revenue play a big part in your cyber insurance premium. And though it depends on all of these details, a majority of small businesses pay between $1,000 and $2,000 per year for a cyber insurance policy.
Still have questions about cyber insurance? Not sure whether or not it’s worth it? Give us a call, and our local insurance experts will happily discuss your options.