For virtually every exposure that exists, there is an insurance product that covers it.
As cyber incidents have become more common, insurance leaders like ProWriters have responded by creating dedicated cyber coverage. But as businesses of all sizes continue to learn how to navigate evolving cyber exposures, many wonder if cyber insurance is for them. Learn from the experts at ProWriters who needs cyber liability insurance and how this specialized coverage can protect you or your clients from the next incident.
Who Needs Cyber Liability Insurance
Most companies have some degree of cyber exposure, and many are more vulnerable than they may think. So who needs cyber liability insurance? Companies that participate in any of the following likely need coverage:
- Provide online access to personal or sensitive data
- Allow remote access to their network
- Accept online payments
- Use text messaging, email, or social media to communicate with customers
- Transfer documents electronically
- Promote or sell products or services through websites or social media
- Save company data on a computer network
- Save personal information on a network, including social security numbers, birth dates, credit card numbers, and bank account information
Companies that operate in any of the above activities are at heightened risk for a cyber attack. And while some assume only large companies are targets, the data tells a different story.
Research from the National Cyber Security Alliance reveals that over 70% of cyber attacks are targeted at small businesses. This is because small businesses are viewed as more vulnerable by cybercriminals. Data from the same organization found that nearly half of all small businesses have already been targeted by a cyber attack.
Even if businesses don’t handle a lot of personal information, they are still at risk, as many cyber criminals don’t care what kind of data a company has. Some of the most common malicious cyber attacks, such as ransomware, have nothing to do with the types of records companies keep. In these instances, the data isn’t the target; it’s the company itself.
Typically motivated by money, a cyber criminal can disrupt a business by demanding payment or locking employees out of their network. The costs of rebuilding a network are often significant, and the lost revenue from cyber business interruption can be devastating. These are financial exposures that are only covered by cyber liability insurance.
For small and medium-sized businesses (SMBs), cyber liability insurance is no longer a luxury. It’s crucial for doing business.
The True Cost of a Cyber Breach
More companies are beginning to understand the importance of cyber risk management and cyber liability insurance. However, some assume it makes more financial sense to forgo coverage and pay the costs out-of-pocket in the event of a breach.
In reality, these costs can be devastating for businesses. The cost to SMBs is significant, with a Kaspersky Lab study estimating the average cost at $117,00. Different types of cyber incidents can incur different levels of damage. The same study revealed the average cost of various cyber incidents for SMBs:
- Malware and Viruses: $68,000
- IT resources being misused: $79,000
- Devices or media containing data being misplaced: $83,000
- Breaches or incidents with non-computing connected devices: $152,000
- Targeted cyber attacks: $188,000
For larger enterprises, the costs are even higher. The average financial impact of a cyber attack for large U.S. companies was an estimated $1.3 million.
Costs associated with a cyber breach are driven by multiple of factors. There are a number of hidden costs associated with a cyber incident, including:
- IT forensic costs
- Notification costs
- Credit monitoring and protection services
- Crisis management and public relations costs
- Lost business
- Regulatory fines and penalties
Because the costs of a cyber incident can be so severe, many businesses that experience a cyber breach never recover. According to the National Cyber Security Alliance, some 60% of SMBs go out of businesses within six months of a cyber attack.
Getting the Right Coverage is Key
While general liability insurance is a must for most businesses, these insurance products are not designed to cover cyber liability. Companies like Sony and P.F. Chang’s have found themselves in legal trouble when attempting to cover a cyber incident with a general liability policy. In anticipation of these kinds of incidents, the industry developed cyber liability insurance as a solution.
Cyber liability policies are specifically designed to protect policyholders from the exposures associated with cyber incidents. Cyber insurance policies today are more comprehensive than ever before and are continually adapting to the evolving cyber landscape.
ProWriters Insurance offers broad and dedicated cyber coverage backed by experts and decades of experience. A policy from ProWriters covers both 1st and 3rd party costs associated with a cyber breach and are optimized to meet the unique needs of the policyholder.
With the number of cyber attacks on the rise and the cost of these attacks skyrocketing, it’s never been more important to get the right coverage. For more information on cyber risk management, download our FREE eBook, Creating a Comprehensive Cyber Risk Management Plan, or speak with a cyber expert from ProWriters today.