Why Businesses Need Cyber Insurance and What It Covers
Many businesses do not understand just how important cyber insurance is or why they need it. Businesses that store personally identifiable information (PII), personal health information (PHI) and/or personal financial information (PFI) are most often targeted. The financial and reputational damage cyber crime has on small businesses can be too much to bounce back from without a comprehensive cyber liability insurance policy.
It’s not a question of if your organization will suffer a breach, but when. Just one stolen laptop, one resourceful hacker, one virus or even one lost paper record of customer data or your company’s financial records can create enormous financial and reputational consequences for your business
What Does Cyber Insurance Cover?
There are several inclusions in a cyber insurance policy and it’s important to discuss the particular risks your business is exposed. Depending on the nature of your business you should consider a policy that includes coverage for:
- Network and information security liability
- Communications and media liability
- Regulatory defense expenses, including fines and penalties coverage
- Crisis management event expense
- Security breach remediation and notification expense
- Computer program and electronic data restoration expenses
- E-commerce extortion
- Business interruption and additional expenses
Cyber Insurance Checklist
In addition to verifying that the policy has all of the important features covered, it is helpful to make a checklist of issues to ask the agent about. To make sure the policy is as comprehensive as possible, ask the following questions:
- Are errors, omissions and acts of outsourced providers or vendors covered?
- Are the acts of rogue employees covered?
- Is data that falls into the wrong hands covered?
- Does the policy have wording that could void the coverage in certain instances?
- Does the policy have a sufficient limit for individual risks?
- Do any other existing policies offer supplemental cyber coverage?
- Does the policy provide coverage for data placed in the hands of trusted vendors?
- Does the policy offer retroactive coverage for issues that are not noticeable immediately?
Mistakes to Avoid
There are several mistakes business owners often make when shopping for cyber insurance. One of the most common mistakes is not understanding the length of the application process. It often takes longer to obtain a cyber policy for your businesses, as the added time is necessary to make sure the coverage is specifically tailored to your business.
Another common mistake business owners make is not taking advantage of what is offered by the insurance agency. Too often, business owners are quick to dismiss any additional suggestions as up-selling attempts. However, many products that our agents recommend are useful and worth the small investment. Never assume that all cyber policies are the same. Know what events are covered and to what extent, and always discuss any concerns with an agent before or after obtaining a policy.
Let us help you make informed decision about your business insurance needs. Our licensed agents specialize in cyber liability insurance, give us a call today at 844-325-9516.