Cyber liability insurance is still a relatively new insurance product. Many companies remain confused about whether they really need this coverage. To many, it sounds like the type of insurance only high-tech companies need.
In reality, companies of every shape and size need cybersecurity insurance, even if they don’t offer a product or service that has anything to do with technology.
Cyber Data Breaches Are Costly on Multiple Levels
The examples of Walmart and Target are common enough, but there are other examples of smaller operations that have faced significant liabilities.
For example, in Philadelphia, a small chain of sandwich shops called PrimoHoagies failed to detect a data breach that took place over the course of seven months. The plaintiff is seeking compensatory and punitive damages that are currently “unspecified.”
Yet if a $5 million suit faced by a Cincinnati freight brokerage company is any guide, it may well be more money than a sandwich company could absorb without insurance companies. Even small medical practices have felt the sting of these cybersecurity suits.
Companies who fail to protect their customers from data breaches can expect to face both personal injury and class action suits.
Lawsuits aren’t the only expense a company has to worry about without cyber insurance. They also will have to cover the costs of repairing damaged software or hardware, replacing funds stolen by hackers, and covering the cost of business interruption caused by data breaches that suspend operation. As customers tend to be either unforgiving of or frightened by the thought of doing business with organizations that have suffered from a data breach, there will be costs associated with repairing the reputation of the business as well.
What a Cyber Insurance Policy Covers
You’ll see two types of coverage when you get your cyber insurance quote.
The first is called first-party coverage. This is the coverage that covers your direct, immediate losses after a data breach. This can include:
- Refunding money that was extorted or stolen from your organization.
- Business interruption costs associated with the breach.
- The repair of damaged software or hardware.
- Costs of reputation management and PR, as well as costs associated with notifying the public of the breach.
- Assorted ancillary costs associated with the breach, as outlined in your policy.
The second type is called third-party coverage. Third-party cyber insurance coverage provides liability coverage for businesses that are responsible for a client’s online security. This includes protecting clients from cyberattacks and data breaches. If the client sues in response to a breach, this insurance product will pay for your legal expenses.
Choosing the Right Amount of Coverage
The cost of coverage can vary wildly. A great deal will depend on the measures you’ve already taken to reduce security breaches in your operation. Much will also depend on the depth of your exposure.
For this reason, it’s vital to work with an insurance agent who understands the norms for your industry and business size, as well as the specific, unique aspects of your own situation that can raise or lower the amount of coverage that is prudent. Your agent can also show you where discounts exist, where to take advantage of them, and how.
So turn to us: your attentive, thorough, local insurance brokers based in Grass Valley, CA. We’ll help you secure the right amount of coverage at the right price. Contact us now.