What is Cyber Insurance?
Cyber liability insurance protects your small business from the high costs of a data breach or malicious software attack. It covers expenses such as customer notification, credit monitoring, legal fees, fines and other costly expenses.
Do you need cyber liability insurance?
Cyberattacks and data breaches are expensive and increasingly common. Most small businesses don't have large IT resources dedicated to cybersecurity, which puts them at risk.
If you handle customer data, accept credit card or EFT payments, or have other sensitive information relative to your customers' lives, you need a cyber policy. Although all small businesses are at risk for cyberattacks, companies in retail, healthcare, financial services and home repair are frequent targets for hackers.
Most small business owners need this type of coverage because they handle one or more of the following types of data:
- Credit card or bank account information
- Medical information
- Social Security or driver license numbers
- Customer names, email addresses, phone numbers and addresses
Types of Cyber Liability Insurance
There are two types of cyber liability insurance. First party coverage protects you when your technology or systems are breached and / or your data is stolen. Third party coverage protects you if a customer initiates legal action against you for failing to prevent a breach at your business.
Who needs Cyber Liability Insurance
Cyber Liability insurance is recommended for businesses that:
- Handle customer data/information sensitive to their lives
- Accept credit card or EFT payments
Cyber market trends: what our experts are saying
Rates within cyber insurance are flat to down due to competitive forces, despite high-profile losses and growing exposure to AI-related cyber attacks. In the future, the frequency and severity of claims will determine when rates might firm up again.
Generative AI introduces new risks, including data privacy issues and potential discrimination lawsuits. Malicious actors are using AI for more convincing phishing and social engineering attacks, raising concerns about "deep fakes." Our small business experts understand the market and can help you secure appropriate cyber coverage.
Consider this Cyber Liability Insurance claim example
A clothing manufacturer suffered a data breach resulting in the theft of 500,000 credit card numbers of the company's customers. A certified forensic investigator had to be hired, along with a public relations firm for damage control, plus the resulting regulatory fines and penalties, including 1 year of credit monitoring at approximately $120 per person, amounting to some $60M and more.
Want to learn more? Contact our small business risk experts