Recently we have seen data breaches and cyber-attacks happen to many of the largest companies in the country. Small businesses and their employees are also vulnerable to data breaches. Even though the threats are the same as what larger companies face small business owners underestimate them and the risks.
Cyber insurance will help your business reduce the risk of exposure by offsetting costs involved with recovery after a cyber-related security breach. Insurance covers expenses related to claims from data breach involving sensitive customer information. Such information includes Social Security numbers, credit card numbers, account numbers, driver’s license and health records.
Insurance coverage is for both first-party costs and third-party liabilities. First-party coverage applies to direct costs for responding to a privacy breach or security failure. A third-party coverage applies when those affected by the breach sue or make claims against your business or regulators demand information. There are a few situations not covered such as reputational harm, loss of future revenue, costs to improve systems and lost value of intellectual property.
Cyber Insurance Covers
- Legal fees and expenses
- Notifies customers about a data breach
- Helps affected victims of identity fraud restore their credit history
- Recovers data that has been compromised; protection includes credit monitoring and services provided by a public-relations firm
- Repairs damaged computer systems caused by a virus and helps your business with the cost of restoring and recreating data
Common Cyber Risks
- Human Error – loss of laptops or smartphones that at one point accessed an unsecured database with client records
- Hacker – individuals with malicious intentions to steal, exploit and sell data for their personal gain.
- Spear Phishing – fraudulent attempts by cybercriminals to obtain private information via email messages designed to appear from legitimate sources.
- Extortion – individuals gaining access to a business’s data system in an attempt to extort money in exchange for returning files.
- Hacktivism – involves individuals breaking into computers for political or social reasons.
- Malicious spyware – a Trojan application created by cybercriminals to spy on victims.