While cybercriminals target both large and small businesses, small and medium-sized businesses are generally easier targets because they tend to underinvest in cybersecurity due to a lack of resources. However, without a robust cybersecurity system, any business will suffer devastating consequences following a data breach. For instance, the average cost of cyberattacks on small businesses in the U.S. is around $200,000. This prohibitive cost makes cyber liability coverage vital for both small and large businesses. Here’s everything you need to know about data breaches and cyber liability coverage.
What Is Cyber Liability Insurance?
Research shows that about 60% of small businesses collapse within six months following a cyberattack. This is largely because most small businesses are unprepared for cyberattacks. Even the seemingly prepared ones do not have the right infrastructure in place to deal with the aftermath of cyberattacks. To deal adequately with cybersecurity threats, businesses need to carry cyber liability insurance.
What Does Cyber Liability Insurance Cover?
This policy typically covers the costs of a data breach as well as lawsuit expenses and third-party claims. Data breach costs include, among others, data restoration, cyber extortion, loss of income, notification costs, and crisis management. Cyber liability insurance also provides the following coverages:
- Regulatory proceedings – This covers fines and penalties imposed by regulatory authorities.
- Network security and privacy liability – This coverage pays for cyber-related claims resulting from negligence.
- Electronic media liability – It covers your business against lawsuits related to crimes such as libel, slander, copyright infringement, and invasion of privacy.
Cyber Liability Insurance Exclusions
A standard cyber liability insurance policy does not cover:
- Intentional acts
- Bodily injuries and property damage
- Costs of upgrading your networks and systems
- Attacks or acts that occur before the policy’s retroactive date.
- Utility failure
- War and terrorism
- Contractual liability
What Is the Most Targeted Data?
Cybercriminals usually target confidential, sensitive, or protected data such as financial information and personal details (client names, social security numbers, credit card numbers, dates of birth, email and physical addresses, and phone numbers). In 2020 alone, at least 47% of Americans suffered cyberattacks. Therefore, you should strive to protect your clients’ financial and personal data.
How to Prevent Data Breaches
At least 90% of data breaches are caused by employee negligence. Therefore, training employees on cybersecurity is a vital step towards achieving cyber resilience. Some of the things employees need to learn include how to create strong passwords, detect phishing scams, avoid logging into malicious websites, access the business system on secure networks, and spot malicious links. Other strategies a business can use to prevent data breaches include:
- Updating software and systems regularly
- Using strong firewalls
- Implementing two-factor authentication
- Changing passwords regularly
- Limiting entry into the business cyber control center
Tips to Recover from a Data Breach
To manage a data breach effectively, you need to follow three key steps.
- Firstly, employ forensic experts to analyze the nature of the attack, determine the extent of the damage, and identify any other imminent risks.
- Secondly, notify all affected parties, including credit monitoring services.
- Lastly, hire an external IT company to secure your networks and formulate plans to prevent and respond to other possible cyber incidents.
One way to deter cybercriminals is to implement a robust cybersecurity program. For extra peace of mind, though, buy the right cyber liability insurance policy. For help evaluating the specific cyber threats faced by your business, contact us today at Atlas Insurance Agency in Sarasota, FL. We’re happy to help you get improved cyber insurance coverage.
