As a small business owner, you may have not considered the need for cyber liability insurance due to the overwhelming number of other priorities that have your focus. Think larger companies that have suffered a cyber breach are in their own league and non-relatable to your circumstances? Do you consider your business to be too "small potatoes" for anyone to breach? Think again.
Cases like Target and Neiman Marcus should influence businesses of any size to consider cyber liability insurance, even if you are a one-man shop. Unfortunately, a number of organizations have yet to invest in this product. In fact, a survey of insurance professionals, conducted by Hanover Research, found that 40% think businesses don’t think they need cyber coverage and 29% believe they’re already covered under existing policies.
Only 12% stated the biggest challenge is that premiums are too high. Contrary to this belief, the cost for this type of insurance coverage is far, far less expensive than the repercussions that would follow a breach. At the end of the day, all companies, small or large, have the obligation to secure their customers’ valuable data against the possibility of a cyber-attack.
High Costs of Data Breach Recovery
A number of small business owners often assume that their company is safe from breaches because larger establishments, due to the size of their business, will be hit first. Although large corporations are the ones making the headlines, according to the NerdWallet, almost a third of cyber-attacks are aimed at them. It may come as a surprise, but smaller businesses can often suffer more damaging consequences from data breaches than larger businesses, not only in terms of fines but also over irreparable public reputation perception. Erroneously, many businesses assume their general liability policy will offer the protection they need in the event of a breach, when often times, should a breach occur, it can exhaust your entire policy and still not cover all related expenses. And, in the worst-case scenario, a breach and its related costs can cause a business to bankrupt and close completely.
Other expenses include:
Business Interruptions—cyber breaches often times force businesses to temporarily stop operations while investigations take place. This, in turn, causes decreases in: profits, brand reputation, and customer/employee confidence.
Security Overhauls—once an attack/expected attack occurs, your company may look into updating or implementing new security measures. Additional resources are spent on new software, instillation, and training.
Business Closures—Unfortunately, for those who are not prepared, cyber-attacks can often lead to a complete shut-down of business operations. The time and resources spent trying to recuperate takes a large toll on the business’ finances.
How Can Cyber Liability Insurance Help Your Business?
While cyber-attacks are devastating for those who are ill-prepared, cyber liability coverage provides valuable resources to help regain lost business. Policies generally safeguard against viruses and hacking and step in if a breach does occur. Some policies may also cover liability for web content.
Now that cyber liability coverage has gained some popularity, many carriers are able to provide affordable, competitive rates for businesses of varying sizes. While most believe they will not be able to afford it, this product comes at a low premium when compared to the potential costs incurred by a data breach. While cyber liability insurance may be crucial for a business who stores sensitive data, its coverage does not prevent your business from a data breach from happening. Its value comes from the timeliness in which you'll move after a breach would occur.