Understanding Cyber Liability Insurance Needs for Small Businesses

Today, businesses in every sector operate within a digital economy, and virtually every company needs to have an online presence to succeed. Even the smallest of small businesses use domain sites and social media to attract customers and grow their brand. Even if a company doesn’t have an internet presence, they still likely use web-based software or services.

With any online activity comes risk, as hackers worldwide look to exploit privileged data, disrupt business operations, demand a ransom, or all of the above. However, many small businesses that aren’t tech-based think they’re an unlikely target of cybercrimes.

But that’s not the case—hackers take advantage of this line of thinking and attack small businesses that don’t have defenses because they lack the capital to invest in cybersecurity or assume they’re a soft target. That’s why it’s critical to protect your business with both cybersecurity measures and a cyber liability insurance policy.

The Facts on Cyberattacks

According to FBI crime reports, cyberattacks cost U.S. businesses $2.7 billion during the 2018 calendar year. According to a Small Business Administration (SBA) survey, 88 percent of small business owners viewed themselves as vulnerable to these costly attacks.

What times of cybercrimes do businesses of all sizes need to protect themselves against? Generally speaking, malware (including ransomware), viruses, phishing, distributed denial-of-service (DDoS) attacks, MITM (man-in-the-middle) attacks, zero-day attacks, and SQL injections are among the most common threats.

When these attacks succeed, cybercriminals can steal, leak, lock, or destroy data, halt all online operations, and demand ransoms that would put any company out of business.

Addressing Your Online Security

Though cyberattacks will never be 100 percent preventable, you can take concrete actions to minimize your risks. First and foremost, you need cybersecurity software. Depending on the size of your business and the nature of your work, you may be anything from simple antivirus software to a network security package complete with endpoint protection. Furthermore, you need to train all of your employees on how to avoid and detect attacks. If this all sounds a bit overwhelming, you can head to the Federal Communications Commission website for helpful resources.

The Consequences of a Security Breach

Even with advanced cybersecurity defenses and well-trained employees, a hacker may still succeed at infiltrating your network or devices. If this does happen, what does your business have to lose, and what will the breach cost you?

  • A Halt to Production and Sales– A DDOS can shut down your website, sales portal, or software required for production and cost you days or weeks of critical sales.
  • Lost or Damaged Data– Similar to a DDOS attack, hackers can lock important data and often demand a ransom in return for restored access. They can also corrupt, delete, or leak any of your digital assets.
  • Paying a Ransom– Many businesses choose to pay ransomware costs to get their business back up and running sooner. Making the payment can take a chunk out of your savings and may not pay off. Some hackers take the money and run.
  • Loss of Customer and Client Confidence– Customers and clients alike often see companies that experience security breaches as unsecured and unreliable and take their business elsewhere. The worst-case scenario is a data breach that exposes your customers’ and clients’ information, which often leads to litigation.
  • Legal Penalties and Lawsuits– Many countries, including the U.S., mandate a certain level of protection and hold businesses liable for failing to meet these standards. Suppose hackers leak data about clients, customers, or partnering businesses. In that case, you may not only face a fine, but these victims may be able to sue your business for failing to protect their private information.

Cyber Liability Insurance Coverage

Cyber liability insurance is a form of liability insurance coverage that minimizes losses due to cyberattacks and data breaches. If a third party sues your business after a security breach exposes their private information, such as credit card or social security numbers, cyber liability insurance covers the associated legal expenses. A premium cyber liability insurance policy will also include services like notifying customers of a breach and recovering damaged data and systems.

An Ounce of Prevention

One malicious hacker can undo years of hard work in a day. Cyber liability insurance coverage is the best way to ensure your small business can rebound from a cyberattack quickly. The hackers may evolve by the day, but so can protection, and you can stay one step ahead of the curve with the help of your insurer.

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