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Many small businesses assume they don’t need cybersecurity insurance because they don’t store sensitive data, but that’s not always the case.
Even if you don’t have customer Social Security numbers or credit card information on file, you could still be liable for damages if your site is hacked, and customer data is compromised.
These security issues can break a small business financially, so it’s important to understand what your options are when it comes to cybersecurity insurance.
42% of small businesses suffered a cyberattack last year.
What is Cybersecurity Insurance?
Cybersecurity insurance is a specialized insurance policy that helps cover the costs associated with data breaches, cybercrime, and other digital threats.
This type of insurance can help cover the costs of investigating and resolving a data breach, as well as any legal issues caused by these unfortunate events. It’s important to understand what your options are when it comes to cybersecurity insurance.
1 in 3 U.S. companies have invested in liability coverage or cyber data breach insurance coverage
What Are the Risks of Not Having Insurance?
If your business is hit by a cyberattack and you don’t have cybersecurity insurance, you could be on the hook for some hefty expenses.
In the process, you could also:
- Lose customers
- Suffer damage to your reputation,
- Be forced to shut down your business.
- Face legal action if sensitive customer data is compromised.
It’s important to weigh the risks and benefits of not having insurance against the cost of premiums.
What Are the Benefits?
Even if you have the best security practices in place, it’s impossible to guarantee that your business won’t be targeted by a cyberattack. The resulting costs can be crippling if you’re hit.
Benefits of having insurance include:
- Peace of mind: Cybersecurity insurance can help ease the stress of knowing your business is covered in case of a digital attack.
- Protection from costly damages: A successful cyberattack can result in expensive damages, including the cost of investigating and resolving the issue, as well as any ensuing legal fees.
- Attracts investors: Having cybersecurity insurance can make your business more attractive to investors. They know you’re covering all your bases.
- Improves customer confidence: Customers are more likely to do business with a company that has cybersecurity insurance, as it shows a commitment to protecting their data.
What Does Cybersecurity Insurance Cover?
Cybersecurity insurance policies can vary, but they typically cover a few primary areas:
- First-party expenses: This includes the cost of investigating a data breach, notifying customers, and providing them with credit monitoring or identity theft protection services.
- Third-party expenses: This includes the cost of defending against lawsuits or regulatory actions related to a data breach.
- Business interruption: This covers the loss of income if your business is forced to shut down or scale back operations due to a data breach.
Picking Out a Policy
When shopping for a cybersecurity insurance policy, there are a few key things to keep in mind:
- Coverage limits: Make sure you understand the coverage limits of the policy and whether they meet your needs.
- Deductibles: Some policies come with a deductible, which is the amount you’ll have to pay out of pocket before the insurance company steps in.
- Exclusions: Read the fine print to understand what’s not covered by the policy. This might be a deal-breaker for a policy that might be missing vital features you need.
It’s also a good idea to get quotes from multiple insurance providers to compare rates. And be sure to ask about any discounts that may be available, such as for bundling multiple policies.
When it comes to cybersecurity insurance, there is no one-size-fits-all policy. But by taking the time to understand your needs and compare options, you can find a policy that offers the coverage you need at a price you can afford.
How Much Does It Cost?
The cost of a cybersecurity insurance policy will vary depending on several factors, including the size of your business and the amount of coverage you need.
Policies can range from a few hundred dollars to tens of thousands of dollars per year, so it’s important to shop around and compare rates before deciding.
When in doubt, it’s always a good idea to speak with a licensed insurance agent to get expert advice on what type of policy is right for your business.
Do You Need It?
The decision comes down to risk analysis of your business. If you feel like your business is at elevated risk for a cyberattack, then it may be worth the investment. But if you have a small business with limited data, you may be able to get by without it.
Cybercrime, which includes everything from theft or embezzlement to data hacking and destruction, is up 600% as a result of the COVID-19 pandemic
However, keep in mind that peace of mind is worth something, too. So, if you’re worried about the possibility of a cyberattack, it may be worth the investment to get a policy.
With the right policy in place, you can sleep a little easier knowing your business is protected.
Improve Your Cybersecurity Posture
Need help with tech-related cybersecurity insurance questions, cybersecurity audits, or assistance developing a cybersecurity strategy? Our cybersecurity architects have the right solutions for your organization’s needs. Call 563-441-1504 or contact us online to learn more!
References linked to:
https://advisorsmith.com/data/small-business-cybersecurity-statistics/
https://www.enterpriseappstoday.com/stats/cybersecurity-statistics.html
https://www.embroker.com/blog/cyber-attack-statistics/
