Should My Business Consider Getting Cyber Insurance?
Businesses used to have to worry about physical break-ins to their building, but in today’s technology-driven world a virtual break-in can be just as devastating.
Just one data breach can impact a business for years after it happens due to lost trust and business. The average cost of a data breach for a small or mid-sized company is $2.65 million.
Some of the IT security dangers out there for companies in Central Florida include:
- Credential theft
- Phishing attacks
- Mobile malware
- Brute force attacks
- Social and SMS phishing
- Data breaches & data leakage
A good cybersecurity infrastructure that protects against breaches, viruses and other cyber threats is a form of insurance, but do you need something more?
What is Cyber Insurance?
Cyber insurance is a new type of business insurance born out of the high costs of a data breach to a company.
When companies store databases of client information, such as SSNs, credit card numbers, and other personal data, if that data is compromised in a breach, they could be held responsible for the damage done to those clients. (identify theft, credit card fraud, etc.).
And those costs can often be just as devastating as something that causes physical damage to company, like a fire or flood.
Cyber insurance is a type of insurance that covers liabilities in the case of a data breach. It picks up where general liability insurance leaves off, which is typically bodily injuries and property damage.
Cyber insurance can cover the costs of things like:
- Recovering compromised data
- Repairing the IT issue that lead to the breach
- Sending a notification to clients about the breach
- Offering identity theft protection or any other reparations to customers whose data was compromised
- Losses due to business disruption
How Can Cyber Insurance Benefit My Business?
Just like any other type of insurance, cyber insurance helps prevent a costly crisis from devastating your business financially.
Some recent statistics from the National Cyber Security Alliance related to businesses with fewer than 500 employees found that, after a data breach:
- 10% of small businesses go out of business
- 25% have to file for bankruptcy
- 37% experience a financial loss
Here are some of the benefits of adding cyber insurance to your overall business risk mitigation plan.
Fills an Important General Liability Gap
Many company general liability policies do not cover losses incurred by a data breach. They will typically pay claims related to physical property damage or an injury.
Since a data breach can now be just as costly as any other type of incident causing physical property damage, it’s important for businesses to protect themselves. A cyber insurance policy fills a big gap in the case of digital security breaches.
Gives You the Resources to Properly Respond to a Breach
Handling a data breach properly can be expensive. It can include things like
- Hiring an IT firm to find out how it happened and the extent of the breach
- Removing harmful malware from your network and devices
- Hiring an attorney to understand what needs to be done regarding the breach notification process
- Fortifying defenses to keep another breach from happening
- Making identity theft services available to customers for a certain period of time
Data breach insurance helps with those expenses so you can properly respond to a breach. If you don’t have that extra safety net, you may not be able to afford expert counsel to guide you through or have the means to properly identify how the breach happened, leaving you vulnerable to another breach.
Protects You from Devastating Losses Due to a Breach
Data breaches can cost companies millions of dollars coming from a variety of areas, such as liability costs, data compliance penalties, emergency IT costs, and more.
Many small businesses can’t bear those costs and stay in business for very long afterwards. In this case, having cyber insurance can be the one thing that keeps you from having to close your doors or file for bankruptcy due to the expense of a data breach.
Can Help You Recover Productivity Losses
Some cyber insurance policies can help you recover downtime costs as the result of a data security incident. Downtime and the resulting lost productivity is a large loss area when it comes to a breach, ransomware attack, or other security incidents.
Being able to recover losses from disruption of operations can get you back on your feet much faster and make a cybersecurity incident much less costly overall.
Helps You Repair Your Reputation
When companies have a data breach, customers lose trust and many of them leave and seek out a competitor. That loss of business is why the costs of data breaches can be borne by companies for years after a breach happens.
Data insurance gives you the financial resources to properly handle a data breach – sending out timely communications, offering identity protection, taking steps to improve your cybersecurity infrastructure. This helps you instill confidence in your customers that you’re handling things effectively, which can help repair your reputation and mitigate business loss.
Get Expert IT Guidance from Professionals That Care
Trying to navigate an increasingly complex technology world can be difficult without an expert by your side. Our C Solutions team truly cares about your business and helps you drive it forward.
Schedule a free technology consultation today! Call 407-536-8381 or reach us online.