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What is Cyber Liability Insurance and Why do You Need It?
No matter the size of your business, data breaches happen. Sure, cybersecurity is a big part of your defense strategy, but what happens if the bad guys win despite your best efforts? Cyber liability insurance will lessen your financial responsibility if you are a victim of a breach and can help you recoup your legal costs and even, in some cases, the direct hit to your budget from lost income, downtime, brand reputation damages, and other financial fallout following a data breach.
With cyber attacks on the rise, the number of successful cyber crime attempts is causing insurers to pay out like never before. The market is “hardening,” as insurers increase premiums by as as much as 100% and require far more of their clients to qualify for coverage. So, let’s dive into the world of cyber liability insurance, and what it means to you.
What is Cyber Liability Insurance?
You have insurance to cover your car, your health, your home, and your business’ assets. Consider cyber liability insurance as an insurance policy for your network. Cyber liability insurance is also known as cyber risk insurance or a cyber insurance policy.
It’s important to understand that, while some business liability insurance offers limited cyber risk insurance, these limited policies will most likely not cover you in the case of a data breach.
What Does Cyber Liability Insurance Cover?
The consequences of a data breach touch every aspect of a business, from a tarnished reputation to regulatory fines, downtime, court and legal costs, and even ransomware payments.
Your cyber liability coverage should cover, at the minimum, legal costs, regulatory violation fines, and incident response including investigations and data recovery.
Make sure you read the fine print before signing on the dotted line. Insurance companies can often throw in clauses and loopholes that will absolve them from paying a claim. One example is a refusal to pay for state-sponsored attacks, a big part of many ransomware threats.
Make sure that you are purchasing both first party (your own business) AND third-party (your customers) policies.
How Much Does Cyber Risk Insurance Cost?
As of 2022, annual cyber liability premiums can run your business anywhere from $1500 to upwards of $3,000 depending on your size, the types of data you handle, and the sensitivity of that data.
Remember that your policy costs will depend on how robust your cyber security strategies are, including a recent cyber-risk assessment. You may also need a different level of coverage depending on your industry-specific regulations; for instance, a health care provider will want a policy to cover HIPAA violations.
In addition, some other factors for the price of cyber risk insurance can include:
- The number of credit card transactions
- The type of data stored, such as sensitive personal information
- Your industry vertical
- Business Size
Understanding your risks and the costs of downtime, data recovery, and potential legal liability is necessary for choosing your policy.
Who Needs Cyber Insurance?
Any business, regardless of size, who collects and stores data, sensitive client information, trade secrets and other proprietary information needs cyber liability insurance. This applies no matter how or where your data is stored; in the cloud, mobile devices, PC’s, servers…no data storage is fool-proof, and wherever data is stored, there is vulnerability.
Unless your business can withstand the costs of a data breach (and few can), cyber risk insurance isn’t just a good idea. It’s a necessity.
Iconic IT Understands Cyber Liability Insurance Requirements
While we don’t sell cyber liability insurance directly, we regularly work with insurers directly, and ensure that the clients who hire our MSP services get compliance services as part of the package. We work with you to ensure you’re meeting your insurers and regulator’s requirements year after year.
We’d love for you to contact us anytime to discuss your needs. Not ready to chat? Download our free Cybersecurity Essentials Kit for cyber security checklists, assessments, informative eBooks and webinars, policy templates, and other resources. This is a do-it-yourself bundle you can’t miss.