Whether you’re a large investment firm or a small healthcare provider, your business is vulnerable to cyber attacks. The costs associated with these attacks can be devastating to your bottom line.
Luckily, you can protect your business by purchasing a cyber insurance policy. This coverage will pay for your legal fees, customer notification expenses, data recovery costs and more if you are a victim of a cyber attack.
1. Protects Your Data
You can’t stop hackers and malware, but you can protect your business by implementing and maintaining strong security protocols. Cyber insurance can mitigate extra risk for your organization by covering costs related to a data breach.
Even small businesses can be targeted by hackers, especially if they don’t have strong cybersecurity. Healthcare clinics and private practices, in particular, hold sensitive patient information and can be a target for malicious actors.
A cyber insurance policy can help you cover the costs of a data breach, including ransom payments and customer notification, among other expenses. But don’t rely on it to be your sole security strategy. NerdWallet recommends combining it with other types of small-business insurance, like general liability and errors & omissions coverage, to create a well-rounded protection plan. One option is Berkshire Hathaway’s Three, a comprehensive policy that includes all of these types of business insurance. You can find quotes and purchase it online. For more options, see NerdWallet’s review of the best business insurance companies.
2. Covers Identity Theft
Cyber insurance protects businesses and their clients against the financial loss resulting from the unauthorized access of private data. It can help cover costs associated with notifying customers, the cost of a crisis communications team and the legal fees that arise from privacy breaches. It can also cover the cost of any forensic services that are required to restore systems.
Identity theft is one of the main reasons why people seek out this type of insurance, as it can help protect them from the financial fallout of a breach. This is important because it can provide reimbursement for psychiatric services, lost income and relocation expenses.
As more and more companies and industries adopt cybersecurity best practices, it’s becoming more common for them to require cyber insurance from their vendors and clients. This helps protect the client from the potential risk of a cyber attack and provides peace of mind that their business is protected. In addition, cyber insurance is often cheaper than many traditional policies.
3. Covers Business Interruption
Cyber business interruption (CBI) coverage reimburses your business for loss of profits and extra expenses if an incident disrupts your operations. It’s typically included as a part of your cyber insurance policy and helps mitigate disruption caused by a breach, cyber extortion or third-party damage.
It covers the costs of resuming operations, such as hiring a call center to respond to customer enquiries, public relations advice, IT forensics and legal fees related to any regulatory investigations by law enforcement agencies. It can also cover lost revenue and the cost of renting temporary space.
You may also want to consider adding an extra layer of protection by supplementing your business interruption coverage with a business income loss policy, which provides a fixed amount of money per day for the length of time your business is unable to operate due to a cyber incident. NerdWallet’s top-rated small business insurance companies include Chubb. Compare their quotes, ratings and reviews to find the best one for your business.
4. Covers Data Breach Costs
As a retail business, you handle a lot of customer data. If hackers successfully infiltrate your system and expose credit card information, a cyber insurance policy could pay for the cost of notifying customers and other associated fees like public relations advice or computer forensic costs.
A cyber policy might also cover your liability for any intellectual property loss. For example, if you publish content online that leads to an infringement of someone’s copyright, a cyber insurance policy might cover any legal fees or damages.
Startups and tech companies often have cybersecurity insurance because they store large amounts of data, develop innovative technologies or support online transactions. However, every business can benefit from a cyber insurance policy. It’s important to note that many insurers will ask for proof of existing cyber security strategies and standards before offering coverage. This is because they want to ensure that a business is taking the necessary steps to mitigate their own risk of an attack.