Many small business owners have heard about cyber insurance, but have not had the time to look into costs and coverages.
Under the right set of circumstances, cyber policies are relatively affordable. The application process can be more straightforward than you might expect.
In a 2020 survey of 2,055 small and medium-sized businesses, CyberScout discovered that 64% of surveyed businesses did not have business cyber coverage. Five percent didn’t know whether they had any cyber coverage in their current policy.
Cyber criminals keep finding new & improved exploits and cons. The FBI has identified the Business Email Compromise (BEC) scam as “one of the most financially damaging online crimes.”
Cyber Insurance FAQs
1. What is cyber insurance?
Cyber insurance is a form of business insurance specifically designed to protect an organization against claims arising out of ransomware, a rogue employee, a staff mistake, a phishing attack, theft of hardware, lost or stolen laptop or device, and other events.
2. Does my business need cyber coverage?
You should strongly consider cyber insurance if:
➡ Your business supports electronic transactions
➡ Your business stores sensitive personal information such as Social Security numbers, medical records or credit card information
➡ A six figure ransomware demand or BEC scam would threaten the viability of your business
Your first level of protection against cyber attacks should be the three T’s: technology, technical support and training. In combination, these three layers will minimize the chances of a cyber breach occurring in the first place.
However, these layers do not provide 100% protection. Should a breach occur, cyber insurance provides an important level of financial coverage.
3. How much coverage does my business need?
$1 million in coverage is fairly standard for small businesses. Some small businesses with higher risk profiles purchase $2 million or more in coverage.
4. What does cyber coverage cost?
Premiums vary from business to business based on risk factors and coverage limits. For some small businesses, cyber insurance can cost less than $100 per month for $1,000,000 in coverage. Depending on factors such as industry, revenue and type of client data stored, premiums can go up.
5. What does a cyber policy cover?
Cyber policy coverages vary. However, policies can cover the costs of: cyber extortion, data recovery, business interruption resulting from security breaches and system failures, and eCrimes.
A policy can also cover contingent business interruption resulting from incidents that occur at your vendors or your suppliers.
6. Where can I get cyber insurance?
These days, many business insurance brokers offer cyber insurance in addition to the more common coverages such as fire, flood, general liability and E&O insurance.
However, it is important to know that all cyber insurance policies are not equal. Do you need coverage for data recovery costs or rogue employee damage? There can be a variety of factors to consider when selecting a policy. You’d be best served to work with a broker that specializes in cyber liability insurance.
Check with your IT managed service provider (MSP) for a referral. They should be able to connect with you a broker that provides coverage to both managed service providers and their customers — which can translate into discount insurance premiums for you.
7. How do I apply for cyber insurance?
An application will need to be completed — don’t let that deter you. The good news is that if your company is enrolled in a sufficient cyber security protection program, the application process can be quick and easy. Otherwise, you will need to fill out a long-form application with the help of your broker and IT team.