It is widely recognized that small businesses are highly targeted by cybercriminals due to their vulnerabilities. According to Security Magazine, a staggering 63% of small businesses have experienced cyber attacks, with 58% suffering actual breaches. However, many fail to fully comprehend the substantial financial impact of a cyber attack.
To address this concern, cyber liability insurance has emerged as one of the fastest-growing insurance categories. It covers the significant costs associated with a breach, which can vary depending on your specific policy. These costs may include:
- Legal fees for handling lawsuits, including class action litigation, fines, and penalties resulting from regulatory investigations by government and law enforcement agencies.
- Negotiation and payment of ransomware demands.
- Data restoration and emergency IT expenses to recover and restore your network.
- Customer notifications and credit monitoring services to mitigate risks of identity theft for clients and employees.
- Public relations expertise and call center costs to manage incoming inquiries and concerns.
- Revenue loss resulting from the inability to conduct transactions, as operational and data disruptions can impede sales and service delivery for extended periods.
- Errors and omissions coverage for liability arising from failure to perform services or adequately protect customer data.
Safeguarding your hard-earned assets from cybercriminals necessitates the inclusion of cyber liability insurance as a vital aspect of asset protection. However, it is essential to be aware of a crucial fact: insurance companies require businesses to implement robust and comprehensive cyber protections to be eligible for coverage. Insurers naturally aim to reduce the likelihood and financial impact of devastating cyber attacks to avoid extensive payouts, making this information vital for you.
While many business owners assert that they have the necessary policies and protections in place, such as two-factor authentication, strong password requirements, employee awareness training, and data recovery backups, they often fail to actually implement these measures because they assume their IT company or personnel is handling it. Unfortunately, this assumption is not always accurate.
Unless you possess expertise in cybersecurity, it is easy to unintentionally misrepresent or make false statements during the insurance application process. Such misrepresentations can lead to denied coverage and policy rescission in the event of an attack.
To ensure compliance, it is crucial to collaborate with your IT company or personnel to guarantee 100% adherence to the security standards, protocols, and protections you claimed to have in place when applying for coverage. In the event of a breach, your insurance provider will not simply issue a check. Instead, they will conduct an investigation to determine the cause and nature of the breach. They will require tangible evidence and documentation demonstrating the preventive measures you had in place against cyber threats. If they discover that you failed to implement adequate preventive measures as represented in your insurance application, they have the right to deny your claim and coverage.
If you have concerns regarding coverage necessity, sufficiency, or your efforts to prevent an insurance denial, we strongly encourage you to schedule a quick consultation. We can discuss your current situation and provide a referral to a trusted cyber insurance expert.
Furthermore, if you wish to assess your cybersecurity preparedness and determine your vulnerability to ransomware or cyber attacks, we offer a complimentary cyber security risk assessment. Simply schedule a phone consultation here to explore this option.
