Cyber insurance shouldn’t be foreign to small business owners, and it can potentially keep your homefront secure.
More and more, companies are turning to cyber insurance policies to safeguard their online reputations. From mom-and-pop shops to big corporations, CNBC reports that cyber insurance is helping businesses insurance against cyberattacks and other online threats.
What do you need to know about cyber insurance to make it work for your business?
What Is Cyber Insurance?
Cyber insurance seeks to insure companies against liability from cyberattacks. Much like homeowners might purchase flood insurance to protect them from losses due to a flood, cyber insurance holders are protected from the foreseeable results of data leaks, hacking, and other forms of cyber intrusion.
With giant companies like Target being potentially held liable for millions of dollars after a data leak occurs, it’s just good sense to have some sort of safety net for potential cyber disasters. Even if you’re not a Fortune 500 company, cyberattacks can cost small businesses thousands of dollars.
Small businesses often work on very tight margins, so even a small loss from a cyberattack can mean hamstringing your business plans. This is one of the many reasons that more and more businesses have been purchasing cyber insurance. According to Marsh Risk Management, the number of clients purchasing cyber insurance increased 21 percent between 2012 and 2013.
And there isn’t just one kind of cyber insurance, either.
What Does Cyber Insurance Cover?
Cyber insurance is potentially as broad a category as “commercial liability insurance,” and different plans can cover different facets of your online presence. As Fox Business’ Matt Egan explains, most of the coverage is best categorized under first-party expenses or third-party liability:
First-party expenses. This includes the costs of cleaning up after a cyberattack: investigating the attack, notifying customers of a breach, or settling with hackers to stop an attack. This may also include the costs of repairing damage to your business reputation via social media.
Third-party liability. This form of liability insurance covers lawsuits by customers and/or employees of your business who may have had their personal information or identities stolen or compromised.
The kinds of cyber insurance policies offered continue to grow, and Fox Business reports that big names like AIG and Chubb are beginning to offer such plans.
Purchasing cyber insurance may not prevent you from being hit by a cyberattack, but it can potentially prevent it from bankrupting your business.