Cybercrimes are an increasing concern in our digital, interconnected society. Even brick-and-mortar businesses use online databases, tools, or software to streamline operations and deliver a better customer experience. For fully online businesses, the risk of cyber fraud is even greater.
Media coverage tends to highlight high-profile breaches with multi-million-dollar enterprise losses, but the risk for small businesses is just as high. In fact, Symantec’s 2016 Internet Security Threat Report found that 43% of all cyber-attacks were targeted against small businesses!
Even with dedicated cyber-defense teams and tools, criminals are finding new inroads to continually exploit businesses. According to the Cost of Data Breach report in 2019, the average global cost for a data breach is $3.92 million. In recent years, companies have focused their efforts to build up virtual defenses and create anti-theft digital security, but that’s only half of the equation.
Cyber insurance coverage is a growing industry, and insurance companies are working to help businesses cope with the new challenge of cyber-threats. Initially, cyber policies only covered the most basic third-party losses, including network security liability, unauthorized data access, and failure to prevent malicious code. However, the impacts and risks of cyber-crime vary widely, so insurance companies are stepping in to provide more options.
If your company is targeted by hackers or a phishing scheme, you will likely lose so much more than just raw data:
- How will your brand’s public perception suffer?
- Will you lose time and resources with business interruption during the cyber cleanup?
- Are you willing to pay cyber-extortion fees to a hacker in order to regain control?
- Can a client sue you for damages if their information is stolen from your database?
Cyber insurance policies are complex with a wide variety of coverage options and service extensions. As you begin the search for appropriate coverage, here are just a few of the decisions that you need to make in order to protect your business’ digital assets:
- Stand-alone or extensions? A stand-alone policy may be more comprehensive with a specialized insurance provider.
- How high are deductibles? Weigh the trade-off between upfront affordability and high incident deductibles.
- General or targeted attacks? Look for a policy that will cover any attack that you fall victim to, not only those that target your business directly.
- E&O overlap? Some E&O insurance and cyber policies include similar coverage, like non-malicious employee actions.
- Does it cover social engineering? Fraudulent instructions and phishing are very different than a standard data breach, and so is the coverage.
- Third-party or first-party? If you store confidential information for clients, you also carry potential liability in a data breach.
- How long is the reporting period? Many phishing attacks happen over the course of months or years, so rigid short-term timelines could be limiting.
- Business interruption coverage? First party interruption coverage can bridge the gap after expenses and lost time or revenue.
As an independent insurance agency, we don’t believe in a ‘one size fits all’ approach. If you’d like more information about cyber insurance and how it can help protect your business, feel free to contact Oracle RMS.
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