Cyber liability. It might sound futuristic, but its time has come.
To address a common misconception head on, it’s not limited to tech companies. Cyber liability coverage is a must for any business that handles sensitive client information— credit cards, customer records, and other confidential data. Nowadays, nearly every company deals with this sort of information as a part of the normal course of business.
Cyber liability and data breach coverage provides protection against the costs your company can incur when a data security situation occurs. For example. say you run a small-town fitness center that charges cards on a monthly basis, and an employee steals customer bank account information.
You gathered this information with good intentions – to charge your customers’ monthly membership fees in a convenient way – and did your best to protect it in a secure system. But, unfortunately, an employee with some computer knowledge accessed the information and made fraudulent purchases on customer bank accounts. This is a data breach— and now you’re on the hook for the cost.
These situations often end up in court. If a judge orders your company to pay a settlement, legal fees or other court costs, cyber liability insurance can help. It was designed to save your business from a devastating financial blow.
A Bit of History
The first cyber policy was written in 1997 in response to the alarming rise of hackers, or high-tech thieves, who began targeting organizations in a systematic manner. During the late 1990s and 2000s, these insurance policies expanded as hacking expanded.
The insurance industry has updated policy coverage over the years to include many types of sophisticated data breaches. Cybercrime now costs the global economy $450 billion a year – yet 53 percent of businesses still report being ill-prepared for cyber attacks.
So is your business really at risk? Small business owners sometimes think data thieves primarily target big companies like Target – one of the famous cases we see in the headlines. However, 62 percent of cyber attacks are on small and mid-sized businesses. And of those, 60 percent of small businesses go out of business within six months due to the financial strain. Plus, small businesses rely on homegrown strategies like word of mouth and friend referrals – which are quickly tainted when a security breach occurs. Suddenly your business is the talk of the town, and not in a good way.
Risk and Planning
So the question is not so much if your business will be affected by a data breach, but when – and what you can do about it. Security experts say the best way to prepare for cyber attacks, and minimize their impact, is to put a plan in place ahead of time. Train employees how to handle sensitive data and train them how to respond if a data breach is suspected. Make sure everyone in your organization knows the plan from the first moment they handle customer information.
Having cyber liability insurance also creates a plan. If the worst case scenario happens, insurance helps you quickly defray the cost of a data breach and move on to restore confidence in your company.
Click here to get a quote and ensure you’re fully covered for cyber attacks.