For small and medium-sized businesses (SMBs), cyber liability insurance may have previously been ‘nice to have’. But, when considering the rise of technology and digital communication, SMBs can longer ignore it.
In this digital age, there is a growing risk of cyber-attacks and data breaches. So, businesses of all sizes need to ask themselves this question: “Do we have adequate security measures in place to avoid massive consequences related to cyber threats?”
What Is Cyber Liability Insurance?
Cyber liability insurance guards against businesses being held liable should they encounter a cyberattack or threat. The need for this could arise from privacy breaches. For example, cybercriminals could compromise data or information that may affect clients or other third parties.
Threats and breaches have far-reaching effects. As a result, there are expenses, like lawsuits, that businesses then need to pay to try to resolve the situation.
What Does Cyber Liability Insurance Cover?
This is a valuable point to consider. Identity theft is becoming much more common with 1 in 10 people falling victim to it every year.
As such, businesses need to prepare for it and make sure their employees are up to speed on best cybersecurity practices.
However, some cyber liability insurance policies do cover this type of cyber attack. It’s best for businesses to make sure that their insurance covers the recovery of information as well the impact that it will have financially.
Probably one of the most far-reaching and heavy consequences of not having cyber liability insurance is the financial loss that a business will suffer if they do not plan adequately in case of a breach or cyberattack.
The costs that businesses will incur can be attributed to extortion, data recovery as well as lawsuits.
Further to this is the effect that it will have on a company’s reputation. This will have far-reaching impacts that can affect businesses well into the future. The safeguarding here is for the insurance to mitigate any potential financial losses that SMBs may experience.
Interruption to the Flow of Business
Businesses need to check that their policy of choice covers the interruption of business. This is because a cyberattack will definitely cause disruption. In this case, cyber liability insurance will cover a business if they are forced to halt business operations. This could be due to the size of the breach or the impact the compromise has on daily operations.
Companies will also need to take into consideration how financially-prepared they are to pay employees if there has to be a shutdown and business cannot continue as usual.
Recovery of Reputation
Some cyber liability insurance policies also cover marketing and PR costs. A cyberattack can severely damage a business’ reputation. So, they will need to work hard and expend a lot of resources to repair that damage.
Their marketing efforts will need to work five times harder if they have taken a blow to their reputation. So, SMBs should consider a cyber liability insurance policy that covers these costs.
Cyber extortion happens when the person carrying out the cyber attack holds the company’s information in exchange for a ransom.
When thinking about the amount of information the hacker has at that point, companies will quickly realize the magnitude of what is at stake. Cyber liability insurance can provide funds to help SMBs meet the demands of the cybercriminals
However, different insurance providers will have different stances on how to respond to cyber extortion. So, when choosing your provider, make sure you clarify what will happen if your business should fall victim to this type of attack.
To Sum It All Up
While the digital age provides many advantages for SMBs, it also provides huge opportunities for cybercriminals. Businesses need to prepare themselves for the worst. This is why SMBs need to invest in cyber liability insurance.
It is important to note that MicroAge is not an insurance expert. We highly recommend speaking with an insurance expert to get appropriate advice. MicroAge can help you gather the information and align your technology to get the best cyber insurance for your business. Contact your local MicroAge today.