We’re guessing you didn’t just happen upon this blog. Something must have piqued your curiosity. Maybe you already know you need this type of insurance coverage, or perhaps you were spooked by news of a recent cybersecurity breach. Perhaps you remember the most significant cyberattack from last year when Russian hackers infiltrated Colonial Pipeline, which led to a sudden shutdown of a crucial fuel pipeline, sending gas prices soaring on parts of the East Coast.
Well, not to alarm you, but there was a cyberattack roughly every 11 seconds in 2021, according to Cybersecurity Ventures, which is nearly a 50% jump over 2020. Cybersecurity Ventures reports that cybercrime will cost companies worldwide some $10.5 trillion annually by 2025, up from $3 trillion in 2015. And don’t think that because you’re a small business that you will fly under the radar. According to a study by Accenture, 43% of cyberattacks are aimed at small businesses.
Is the hair on the back of your neck standing up? It should be. (We scare because we care!) A data breach can do more than damage a computer system. It can damage a company’s reputation and put customers or employees at risk. That’s why cyber insurance can be a wise precaution.
A cyberattack is any attempt to gain unauthorized access to a computer, computing system, or computer network with the intent to cause damage. They aim to disable, disrupt or control computer systems, or even manipulate or steal data. They most commonly involve malware — short for malicious software — often with “infected links” that you should not click.
There are generally two types of cyberattacks:
Generally, cyber liability insurance covers the immediate costs associated with falling victim to a cyberattack and hacking threats. It covers liability for a data breach involving sensitive customer information, such as Social Security numbers, credit card numbers or health records. It can also pay to repair damaged computer systems and recover compromised data. However, it is typically excluded from a general liability insurance policy. It is also important to note that some insurers have separate cyber liability insurance and data breach policies.
The financial damage caused by loss of intellectual property is generally not covered by cyber liability insurance, and neither is the reputational costs that can be incurred following a cyberattack. For example, this insurance could pay for the costs associated with dealing with the direct aftermath of a cyberattack, but in the longer run the company might lose business due to public perception of having poor cybersecurity. This type of policy won’t cover the cost of losing customers due to the resulting bad reputation.
Really any business with an online component or one that sends or stores electronic data might benefit from cyber liability insurance, as may any organization that relies on technology to conduct its operations. So … that’s pretty much everyone! But it really boils down to your comfort level with the security you have in place.
Like with most insurance policies, the answer is, that depends. The premium is based on many factors, including the size of the business and its annual revenue. Other factors are based on the type of industry, the type of data that the business typically deals with, and overall security of the company’s network. It’s reasonable to assume that a company that has a history of data breaches will be charged more for a policy than one that tends to keep itself secure.
Industries — like health and finance — that deal with sensitive information are prone to higher rates as well. For starters, insurers will want to know what cybersecurity your company already has in place.
To give you an idea, cyber liability insurance ranges from $1,000 to a few thousand, and some policies may even cost less.
Give us a call at (724) 349-1919, and we can help you determine if cyber insurance is worthwhile for your business.