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March 1, 2017

How Cyber Liability Insurance Can Save Your Small Business

As a small business owner, you already know liability insurance is a must. What about Cyber Liability Insurance? In the event of property damage or bodily injury, standard liability insurance will have you covered. It will no cover your business, however, in the event of a cyber attack.

The Cost of a Cyber Attack

No matter how large or small your company, no one is immune from a cyber hacking attack. Hackmageddon routinely publishes a list of recent high-profile attacks. Between January 1st and 15th, 2017, for example, there were 37 major attacks including attacks on a number of universities, a human rights commission, a cancer agency, Google, Netflix, a prominent tech forum, numerous government offices, the list goes on (Hackmageddon). And yet, many attacks are smaller in scale but still cause a tremendous amount of damage. Sometimes the attacker’s identity is uncovered, but at other times information is stolen, money is lost, and reputations are tarnished without the attacker being known.

First Party vs. Third Party Liability

First Party Liability is when your information or your business’ information is breached. It might look like a virus or malware that has your damaged internal IT systems. Third Party Liability is an event in which client information is compromised (i.e. Netflix user database hack compromises individual account information).

A recent study concluded that 72% of data breaches actually occur in small to mid-size companies with an average $5 million dollar cost for the data breach (Ohio CPA). This is why data breach insurance is important for businesses of all sizes.

Types of Cyber Liability Claims

Laptop and Device Theft
Small businesses in Ohio make Cyber Liability claims all the time. A classic example of something simple yet consequential is a stolen business laptop. Significant business information and data is often stored on business laptops. If a rogue employee or burglar were to steal a business laptop, he or she could do a lot of damage.

Software Virus
The unleashing of a skyware virus might not be meant for the business, however, if an employee were to open an infected email on a work computer, a hacker could be sent screenshots of every email that comes through the office.

Dumpster Diving
You may have heard stories about a local woman who lives near a medical office dumpster diving to fish for social security numbers found in patients’ medical records. This can result in huge government fines for the medical offices affected. This is just one of many examples of the kinds of risks that would be covered by cyber liability insurance.

What Does Cyber Liability Insurance Cover?

As the capabilities of hackers grow, cyber liability insurance in Ohio is changing rapidly. It is a relatively new form of insurance but it has skyrocketed in recent years. There is not, however, one standard policy. Cyber insurance is incredibly complex, so it is essential to know the details of the policies offered. You will typically be reimbursed for data breaches, but the reimbursements differ greatly in amount.

Independent agents can help. He or she can be a very valuable resource when considering cyber insurance options. It is essential to properly assess cyber risks, set up cyber security standards, evaluate what a data breach might cost customers, match exposure to cyber coverage, and know how to implement a cyber response plan.

Book a consultation with one of our expert agents today.

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