In recent years, numerous businesses have been targeted by hackers in data security breaches. While it’s mostly large companies we hear about in the news being targets of a security data breach, small businesses are not immune to such risks. According to security software maker Symantec, 40 percent of all cyber attacks are targeted at small businesses.
Most commonly, data security breaches are breaches of personal, business, or customer financial data through access to bank account, credit card account, social security data, or other business account information. Computer viruses, malware, and security breach of servers and networks are other cyber threat concerns. Additionally, a data security breach can be the leaking of intellectual property or business trade secretes by competitors, hackers, or even the businesses’ own employees.
What is Cyber Liability Insurance?
Fortunately, cyber liability insurance is designed to protect businesses from these kinds of security data breaches. Cyber liability insurance protects the small business owner from the threats mentioned above: server breach, network breach, data breach, privacy leaks, financial information breach, trade secret leaks, and intellectual property breaches to name all but a few. Additionally, cyber liability insurance provides coverage for laptops or other electronic equipment if stolen by an employee or someone outside the corporation.
Depending on the cyber liability policy terms or riders added, cyber liability insurance provides coverage for lawsuit damages, lawsuit defense costs, breach notice costs, data restoration costs, breach extortion costs.
Why You Need Cyber Liability Insurance
In today’s modern world, most every business has some sort of online presence. Whether it is sending out a weekly newsletter, maintaining a customer database, or managing a full-scale network, your company is subject to a data security breach. What’s more, any business that has a website or who has employees that participate in social media are subject to the potential threat of a lawsuit from an intellectual property infringement.
While large corporations may have the financial resources to contend with the repercussions of a cyber attack, many small business don’t. According to the House Small Business Healthcare and Technology Subcommittee, the average cost of a cyber attack to small and medium-sized businesses was over $188,000 in 2010.
The Importance of Cyber Security
Although the internet and other technological advances have made operating a business much easier, it also has created a whole new set of risks and challenges. A cyber attack not only can cost a small business thousands — if not millions — of dollars in lawsuit damages, defense costs and lost revenue, but even a damaged reputation and lost customers.
While cyber liability insurance serves as a tool to provide peace of mind and business safety, it also highlights the importance that businesses should take preventative measures, such as using firewalls, antivirus/anti-malware software, encryption software, internal control implementation, audits, and employee training, to keep their networks and confidential data as safe as possible.