Data breaches and cyber hackings are becoming all too commonplace among companies of all sizes. No matter whether you are just storing customer information online, performing transactions or working with various accounts and projects, stolen data can cause a headache and even destroy a business due to negative publicity, upset customers, fees and fines.
What is Cyber Liability Insurance and Why Should I Consider It?
Cyber Liability Insurance, also known as CLIC, is coverage for any data breach or privacy invasion in your company. Up to 68% of funds lost during a data breach are unrecoverable. This insurance provides the coverage needed to pay for the numerous fines, fees and costs associated with the various aspects of a data breach. While this coverage may sound ideal for larger companies due to its larger customer base and pocketbooks, 34% of small businesses are the target of data breaches.
Unfortunately, it isn’t a matter of if — but when — your company will experience a data breach. According to the 2016 Data Breach Investigations Report, 4 out of 5 victims of a data breach don’t even know they’ve been attacked for a week or longer. And 7% of data breaches go undiscovered for more than 1 year.
Cyber Liability Insurance Coverage can save your business. With the right policy, it can cover many of your large fees and keep your business running. In addition, the premiums for this type of insurance won’t put a hole in your pocket. You can receive an ample amount of coverage for a low premium.
What Does this Insurance Cover?
Cyber Liability Insurance has been around for more than a decade but is rarely purchased or used. However, now that attacks are occurring to businesses of all sizes, it is becoming more well-known and a more popular option.
This insurance is designed to cover the costs that come from a data breach or privacy crisis. Sometimes just a stolen laptop or even a smartphone from your company can create havoc on your company. Many Cyber Liability Insurance policies are designed to cover those breaches. However, keep in mind that each policy will differ.
You will find that many policies cover similar aspects of a data breach and privacy crisis. Many policies will provide coverage for the following:
Loss of Revenue During Affected Time Period
Credit Checking for All Affected
Notifications to All Affected or Believed Affected
Crisis Management Fees
How Do I Choose the Right Policy for My Business?
Each policy varies and you must decide what policy is right for the size of your company, your industry, and how at risk your company is. One challenge for insurers is that cyber risks are continually changing and adapting to the times, meaning you need a policy to keep up with those changes. A decent policy will provide you with the basics, but a good policy will help you keep your costs minimal and your company afloat following an attack.
Prior to choosing your company’s policy, it is important that you fully understand your policy, its terminology and what is and is not covered. A few things to consider before deciding on a specific policy include:
Does the policy cover crisis management fees? If so, how much coverage is available?
Will the policy cover laptops, smartphones and other mobile devices?
Is any coverage available if the attacks or a data breach is made from an employee?
What exclusions are defined in the policy?
Will the policy cover any data breaches that occurred before the policy was purchased?
When choosing the right policy, it is important you work with a broker who is familiar with this type of insurance. Because few companies have purchased and utilized this type of insurance in the past, many brokers may not have the experience you need to provide an ideal policy for your company.