Does your business use information technology (IT)? These days, it would be unusual if it didn’t. Email, website services, data storage, and other technologies likely keep your business functioning. Your company’s success is dependent on technology, and that’s why it’s important to protect it with cyber liability insurance.
What does cyber liability insurance cover? This policy will extend beyond your typical business owners policy. The types of risks covered include data loss, interruption of business, identity theft, cyber extortion, and reputation recovery.
Experts say the risks of cyber liability losses are actually greater than your risk of other types of fraud or theft, and there are big costs associated with these risks, such as:
Liability – IT-related incidents may leave your business liable for customer costs.
System recovery – Besides the lost data, your business may be unable to operate for a time while systems are down, resulting in profit loss.
Notification expenses – Letting customers know about security breaches can be costly.
Fines – If customer data is leaked, government regulations may require you to pay penalties for failing to protect their information.
Class action lawsuits – This is usually of concern to larger companies, but depending on your industry, even smaller companies may be at risk.
In fact, the majority of costs associated with cyber crime are information loss and business disruption/loss of productivity. These two combined make up 79% of the external costs businesses face as a result of cyber crime.
So is your business protected? Computer hacking attacks happen to companies of every size. Recent occurrences include those against retail giant Target, but there are many examples of loss of important data in small and medium-sized companies. For example, your employee’s laptop may be stolen and confidential information compromised. Or your cell phone (and all the important data it contains) may be lost or stolen.
To protect yourself, you’ll need a cyber liability insurance policy customized to fit your particular needs. Review your IT practices, decide where you’re vulnerable, and get the appropriate coverage in place. The costs will vary depending on the location of your business, its size, and the limits and deductibles in place for each area of coverage.
You also will want to:
- use up-to-date security software;
- obtain services from a security vendor;
- back up data to an offsite location;
- make use of cloud services; and
Why should this interest them? Your customers (and your employees) are likely as concerned as you are about cyber information breaches. If you can assure them you are taking precautions, and show them you are investing to protect their information, you can build their trust and gain their loyalty. Ensure your business is effectively covered in the event of a cyber problem. Consult with a security software company and your insurance professional. Security can go a long way toward protecting your confidential data, but if a cyber disaster strikes, a strong cyber liability insurance policy could potentially save your business.