No less an authority than the Harvard Business Review declares that cyber attacks are inevitable. But you can help protect your business clients from costs associated with ransomware attacks, data breaches, and more by quoting strong, affordable cyber liability insurance coverage.
Here’s an overview from ProWriters of what cyber liability coverage does, who needs it, and how you can help your business clients get it.
What Does a Strong Cyber Insurance Coverage Policy Cover?
Robust cyber liability insurance coverage protects organizations against both first-party and third-party liabilities related to cyber attacks.
First-party liabilities are costs a company bears to identify, investigate, and recover from cyber security breaches.
Businesses bear first-party liability for the costs of:
- Information Technology (IT) Forensics
Qualified experts must investigate computer systems to determine whether, when, and how a breach has happened. In addition, they assess what data has been exposed, accessed, or compromised. IT forensic costs range from $10,000 to more than $100,000, depending upon the organization’s size and the amount of data involved.
Once companies know about cyber security breaches, they must notify regulators, vendors, suppliers, shareholders, and customers. The organization may set up a call center, for instance, and spend money printing and mailing letters.
- Business Interruption (BI)
Almost every business today uses the internet, but cyber attacks are particularly painful for those who rely on it to generate their revenue. General liability insurance usually won’t cover revenue lost in incidents, but cyber liability insurance coverage can.
- Digital Asset Damage
Cyber attacks can lead to corrupted or destroyed websites, networks, intranet, software, and electronically stored data. Repairing, reinstating, and recreating digital assets to pre-loss status requires substantial expense.
- Cyber Extortion and Social Engineering Recovery
On average, cybercriminals demand a ransom of $570,000 for releasing information seized in data breaches. Cyber insurance can cover what could otherwise be devastating payouts.
It can also help organizations recover from social engineering attacks. In these incidents, criminals trick victims, often through phishing emails, into giving credentials needed to steal funds. According to IBM, compromised credentials caused 20% of data breaches in 2021.
- Public Relations and Reputation Management
How can businesses regain confidence and restore trust after a cyber attack? The answer involves a public relations campaign, often through a paid PR agency.
- Credit and Identity Protection
Companies hit by data breaches often offer free credit monitoring and other identity theft protection to affected parties. For example, federal law requires healthcare organizations do so for two years. Cyber liability insurance coverage can cover this expense, which runs hundreds of dollars per person per year.
- Legal Expenses
Where data breaches occur, lawsuits follow, often just weeks or days after disclosure. In 2020, on average, small and medium-sized enterprises (SMEs) paid $14,000 for legal defense and $387,000 in settlements, according to NetDiligence.
- Regulatory Fines and Penalties
NetDiligence also reports SMEs in 2020 paid $26,000 on average in regulatory fines after falling prey to cyber threats.
Third-party liabilities are costs a company bears because Personally Identifiable Information (PII)—data belonging to a third party—has been breached. Such personal information includes social security numbers, credit card and bank account details, and legally protected Personal Health Information (PHI).
Potential third-party claims resulting from data breaches include but aren’t limited to: breach of contract, negligence in protecting data, computer virus transmission, and Payment Card Industry (PCI) fines, penalties, and assessments.
Which Businesses Should Carry Cyber Liability Coverage?
The short answer? All of them.
No, not all cyber attacks involve headline-making, multimillion-dollar ransom payments organizations like Colonial Pipeline and CWT Global paid. Not all end up in eye-popping bills for recovery costs such as the $17 million of taxpayers’ money the city of Atlanta paid, for instance.
But consider the potential first- and third-party liabilities we’ve mentioned. You’ll understand why companies of all sizes face an average cost of $200,000 per incident, according to insurance carrier Hiscox. And in 2020, the total average cost of a cyber attack for small businesses was more than $25,000.
Would the small business clients you serve be able to absorb that cost?
AdvisorSmith reports 42% of U.S. small businesses experienced cyber attacks in 2020. A healthy majority of small business owners (69%) express concern about cyber threats. Most (72%) have taken steps to prepare for the inevitability.
Obtaining strong cyber liability insurance coverage is as essential a step as implementing multi-factor authentication and upgrading network security.
Help Protect Your Business Clients as a ProWriters Cyber Broker
Business owners, especially those who own small businesses, can find the cyber liability coverage market confusing. Without standardized prices, regulations that vary from state to state, and with constantly changing risk exposures, the choices can quickly become overwhelming.
But when you’re registered as a ProWriters broker, you can easily quote your business clients the cyber policies they need. You can offer a range of transparent and suitable options at competitive prices.
Our Cyber IQ Comparative Rate Platform
- Generates multiple quotes from top carriers, with coverage comparisons, almost instantly
- Provides Cyber coverage solutions from the smallest to the largest risks businesses bear
- Offers you commissions starting at 15%, that grow with the volume of policies you sell
Serve your business clients better and build your practice. Quote and sell cyber liability insurance coverage as a registered ProWriters broker. Get access to our Cyber IQ Comparative Rate Platform now.