In the age of the internet and rapid growth of artificial intelligence technology, phishing attempts and scam emails have been increasing to an all time high.
Having just completed our annual cyber security training, it got me thinking about all the ways in which phishing emails have become more frequent and complex.
No longer just fake princes inquiring about buying them gift cards, those who make phishing attempts can cleverly disguise themselves as your boss, co-workers, and other senders that prey upon your trust to urge you to open links or downloads that can compromise your computer or company’s security.
With how quickly a single phishing email could potentially breach your company’s systems, it’s imperative for businesses of all sizes to ensure they have the proper coverage through cyber liability insurance. As it’s still a relatively newer type of insurance, in this article we’ll break down whether or not it’s automatically included in your business general liability and how it protects your business from cyber attacks.
Is cyber liability included in my general liability insurance?
Many business owners would assume that their business’ general liability insurance would automatically include coverage for any losses resulting from cyber attacks on their systems.
Unfortunately, this is not the case.
While general liability insurance offers numerous protections for your business, it will not typically cover claims related to cyber attacks or data breach. Although some insurance carriers may offer cyber coverage as an endorsement to your policy, in order to protect your business from cyber attacks, you will need to get a separate cyber insurance policy.
What is cyber liability insurance?
Cyber insurance covers costs associated with a cyber attack or data breach. Including malicious actions such as phishing, hacking, viruses, denial of service (DoS), ransomware, malware, and more.
However, cyber liability also covers data loss resulting from freak accidents - like power surges, glitches, and even accidental deletions.
Cyber liability insurance provides your business with coverage of the costs and legal fees incurred from business losses, investigations, lawsuits, and extortion.
On top of coverage for expense recovery, cyber insurance can assist in:
- Providing notifications about security threats and data breaches
- Recovering compromised data
- Repairing damaged computer systems and software
- Consulting on cyber related issues
The difference between first-party and third-party cyber insurance:
Businesses interested in cyber insurance should know about the two types of coverage. First-party cyber insurance will protect your business against the financial repercussions of cyber attacks and data breaches, as mentioned above.
Third-party cyber insurance is another type of cyber coverage that instead protects the insured business if their client or partner suffers a loss resulting from the insured having a cyber attack/data breach.
While not all insurance carriers will offer third-party cyber coverage alongside first-party, it can be an important additional coverage for business owners. Speak with your insurance agent to see if your policy is eligible.
How much cyber insurance do I need?
While cyber insurance is an important coverage for businesses to consider, it may not be crucial for every type of business. For example, small businesses who don’t use technology to store information or process online payment usually will not need the coverage.
For larger businesses or those who utilize technology in their day-to-day, determining how much coverage they will depend on several factors - including:
- Company size
- Revenue
- Likelihood of being targeted
- Estimated potential damage of cyber attack
Businesses in the tech, medical, or financial industries will likely need the coverage, as would larger businesses or corporations with large revenue or confidential information, as their potential financial losses will be high.
Additionally, some contracts may require policyholders to carry a specified level of cyber coverage in order to obtain the policy.
How much does cyber insurance cost?
As the specifics of your cyber insurance coverage will vary greatly depending on the size, revenue, industry, and numerous other factors, the exact cost is difficult to pin down.
Smaller businesses can expect their annual cyber insurance premium to range anywhere from $500 - $5,000. While larger businesses tend to cost tens of thousands annually.
What does cyber insurance not cover?
Unfortunately, cyber insurance will not protect your business from every scenario. In fact, your policy will not pay out if you don’t do your own part in protecting your company from cyber attacks as well.
Ensuring your business is adequately protected from cyber attacks is up to you, and the best way to deter any losses from taking place. When obtaining cyber insurance, the carrier will not go through your security strategies with you - only after you make a claim. Meaning, you might not be covered for every situation.
In order to ensure you’re fully covered by your policy, you should take the following steps to help prevent any cyber attacks:
- Implement employee training
- Have a detailed cyber security strategy
- Use security/antivirus software
- Encrypt your information
- Audit your network
- Use secure, password-protected Wi-Fi
- Use unique employee logins and passwords
Generally, you will need to be already doing these things in the first place to even qualify for cyber insurance.
Keeping your team protected from cyber attacks
Remaining safe and vigilant when it comes to targeted cyber attacks and data security can be just as crucial as cyber liability insurance. Because, even if your insurance policy covers the incident, it cannot protect your business from everything - such as damaged reputation or relationship with your clients/partners and future sales.
With technology changing and advancing every day, it’s up to you and your team to help safeguard your business’ data in tandem with your insurance coverage.
Interested in learning more about what cyber attacks to look out for? Take a look at our article on examples of common cyber insurance claims that could happen to your business.
