The increased digitization of businesses and organizations has led to the proliferation of cybercrimes. Small businesses are particularly vulnerable because most lack the resources to protect themselves adequately. Cyberattacks come in different forms, including, among others, phishing, ransomware, malware, and password attacks. Shockingly, over 90 percent of companies became phishing victims in 2022 alone, as per an AtlasVPN report. Worse still, the attacks caused most of these companies to shut down permanently. One of the best ways to protect your business from such a scenario is to carry adequate cyber liability insurance coverage. Hereâ€™s everything you need to know to bring you up to speed with the basics of cyber liability insurance.
What Is Cyber Liability Insurance?
Cyber liability insurance is a policy that covers financial liabilities that may arise following a cyberattack. A company can lose data and money through data breaches whenever a cyberattack occurs. Consequently, affected third parties, such as partners and clients, may file lawsuits against the company. Loss of money can also drive the company into financial turmoil that will further affect operations. This explains why 60 percent of small businesses collapse within six months following a cyberattack. Thankfully, cyber liability insurance provides financial protection during such times, which is why it is a crucial policy.
What Does Cyber Liability Insurance Cover?
Cyber liability insurance pays for legal costs, customer notification, fines, credit monitoring, IT forensics, data restoration, ransomware demand, and public relations services. These can be categorized in several forms, as discussed below:
- Privacy liability â€“ Cyber liability insurance covers financial losses from violating privacy laws or cyber breaches.
- Network security â€“ In case of losses from network security failure, cyber liability will also come in handy. This is in cases such as data breaches, ransomware attacks, and general compromise of the company’s communication systems.
- Business network interruption â€“ Cyberattacks cause business interruption. For instance, unless you pay the ransom in a ransomware attack, the hacker will hold your network system hostage for the longest time. Cyber liability insurance can repay you some of the losses incurred during the interruption period.
- Errors and omissions â€“ Cyber liability can also cover errors and omissions related to cyber services. For instance, if you fail to deliver cyber services as a client requests, cyber insurance can cover your legal costs in case the affected client sues you.
Cyber Liability Insurance Exclusions
A typical cyber liability insurance policy excludes the following risks and/or events:
- Business network interruption by the government or regulatory bodies
- Terrorism and other criminal-related breaches
- Intentional acts
Attacks Resulting from Poor Maintenance of the Computer System
Take note that you can always negotiate with your insurance provider to include your preferences in the coverage. However, you may have to pay slightly more to compensate for the risk. Also, ensure you get a tailored cyber liability insurance policy since no two businesses are the same regarding exposure to cyber risks.
Cover Your Business Against Cyber Risks â€“ Get the Best Cybersecurity Insurance in Wellesley, MA
Different businesses have different cybersecurity needs and unique risk exposures. At CAV Insurance Agency, we will help you find a cost-effective cyber liability insurance policy that protects your business adequately. Contact our expert insurance professionals, who will assess your needs and help you get the coverage that suits you best.