Even big companies with huge investments in cybersecurity, such as Home Depot and Uber, can fall victim to cyberattacks. Given tighter budgets, small- to medium-sized businesses (SMBs) such as yours are more vulnerable to online threats. But as a business owner, you can add a different layer of protection for your SMB by getting a cyber liability insurance policy.
What is a cyber liability insurance policy?
A cyber liability insurance policy covers the major costs your SMB incurs in the aftermath of a cyberattack. These expenses include government fines, attorney’s fees, penalties from credit card companies, notification costs, and all other costs incurred from repairing your IT equipment and restoring your data.
Depending on your provider, the policy may offer other types of coverage. This can include media liability or the costs that are incurred from the violation of trademarks, copyrights, and other kinds of intellectual property. Privacy insurance may also be included — this applies when certain mishaps, such as lost company laptops or emails sent to the wrong recipients, compromise the privacy of company stakeholders such as employees and customers.
How is it different from errors and omissions (E&O) insurance policies?
Some business owners think that cyber liability insurance is identical to E&O insurance, opting to forego the former because they already have the latter. These two policies do have seemingly overlapping functions and features, which explains much of the misconception.
E&O insurance protects your SMB from accusations of negligence, preventable errors, and other kinds of professional mistakes. The policy covers just the legal costs of the lawsuit, including lawyers’ fees and, depending on the situation, settlements. If your SMB sells computers and a buyer sues you over defective purchases, then an E&O insurance policy can prevent you from incurring considerable financial losses.
Moreover, cyber liability insurance is considered first-party coverage because it pays you for damages caused by a cyberattack. On the other hand, E&O insurance is classified as third-party coverage because it protects you from the actions of third parties, such as your buyers, vendors, or even the government.
Why do you need cyber liability insurance?
The financial losses that result from cyberattacks have put several SMBs out of business. This is because a single cyberattack incident can cost a small company up to $200,000. Investing in a cyber liability insurance policy can help offset or prevent financial losses caused by such incidents.
These are five ways cyber liability insurance can benefit your business:
#1. Recover the cost of a ransom
The United States leads the world in terms of detected ransomware, indicating that this malware remains a major threat to your business. Although the FBI discourages victims from paying their antagonists, you might rely on data so much as to relent. If you have cyber liability coverage, the insurance could help you recoup the amount you lost.
#2. Cushion the cost of a data breach
Should your SMB experience a data breach, you are required by law to notify your customers and other parties involved. Notification, by itself, is already expensive, but you may also be obligated to shoulder identity theft protection, security repairs, and other related costs for all affected parties. Cyber liability insurance can cover these expenses for you.
#3. Get resources to find the perpetrators
To find the parties responsible for the cyberattack on your business, you will need cyber specialists. Cyber liability insurance can reimburse the cost of the cyber forensics experts you will work with.
#4. Have enough funds for legal assistance
In the aftermath of a cyberattack, you may need legal assistance from an attorney who specializes in cybercrimes. This doesn’t come cheap at all. Insurance coverage ensures that you have enough resources to seek help from an expert.
#5. Be reimbursed for the interruption
Imagine how expensive business interruptions can be, even if they last for just a few hours, for an SMB. To give you an idea, but using a much bigger company, multinational law firm DLA Piper lost over $300 million, much of it as payment for 15,000 hours of overtime work, after a ransomware attack disrupted its operations for two days. Cyber liability policies can cover all the income you were unable to earn over the duration of the interruption, as well as any increases in operating costs the attack may have caused.
Cyber liability insurance coverage goes a long way in protecting your SMB from the impact of cybercrimes. But why wait for a cyberattack? Zeta Sky offers managed IT and a wide array of related services that secure your network from malicious parties. Contact us to find out more!