While undoubtedly aware that hacking, identity and information theft, and data breaches are a massively destructive and costly global threat, the average entrepreneur may not know how great the risk is to them. The cyberattacks that get the press are the ones suffered by the huge corporations, a list of which is too long to include here, but that’s not to say that small- to mid-sized businesses aren’t at risk. In fact, 60% of small businesses that get hacked don’t bounce back from a cyberattack and fold within six months.
So, with the obligatory disturbing statistic shared here, what can you do to protect yourself and your business from the consequences of cyberattacks should that become an unfortunate necessity? The concern might be complex, but the answer is simple: You can get cyber insurance.
What is Cyber Insurance and What Does it Cover?
Cyber insurance was born as a feature of broader errors and omissions (E&O) insurance policies. The increasing prevalence, damage, cost, and risk of cyberattacks led to its emergence as a specific area of coverage.
The origin of cyber insurance has led to a misnomer that an E&O policy is therefore sufficient protection against a cyberattack; or that a general liability policy would cover the costs. That’s not the case, as too many entrepreneurs have learned the hard way. There really is no substitute for the coverage provided by a strong cyber insurance policy.
There are a few areas of coverage that are common to most cyber insurance policies, such as:
- Legal fees and expenses arising from an attack.
- Recovery of compromised and sensitive data.
- Repair or replacement expenditures.
- Repair or recovery of damaged networks.
- Notification costs arising from informing those whose information was compromised by the attack.
What Should I Look for in a Cyber Insurance Policy?
While the basics of cyber insurance policies can be similar, that doesn’t mean they are interchangeable. There’s no one-size-fits-all solution. Finding a provider willing to tailor a cyber policy to your specific needs is a must. Look for relevant brokerages that focus on insuring growing businesses and startups. In particular, find brokerages specializing in cyber insurance and in related fields of liability and exposure mitigation like E&O, D&O insurance, fiduciary liability insurance, and EPLI insurance.
When you’ve found some likely candidates, review the specifics of their cyber insurance offerings. An effective cyber policy is one that addresses both the direct cost and the fallout of a cyberattack, including consequences and costs you may have not even considered. Those consequences can be direct hits to your company’s bottom line, like peripheral data loss, business interruption leading to loss of profits along with extra expenses, the loss of funds being transferred, and new security measures necessary to prevent future attacks.
There may be direct and indirect customer, branding, and optics concerns like liability to banks required to reissue credit cards en masse, public relations expenses related to data breaches, and subsidizing credit monitoring to those exposed.
And then there are the legal, regulatory, and third-party liabilities too numerous to list here. Fortunately, a strong cyber insurance policy from a trusted provider can cover or defray those costs while leveraging risk mitigation resources to avoid them in the first place.
Cyberattacks are a destructive, frustrating, and pernicious reality of the computer age. But with the right coverage, they don’t have to be fatal to your startup or growing business.
Embroker is a leading digital commercial insurance brokerage that specializes in covering business liability with coverage custom-made for each client. Their combination of data and technology with real industry specialization has established their reputation as a top-tier brokerage. Founded in San Francisco in 2015, Embroker continues to serve over 1,800 customers and is licensed in all 50 states. Their user-friendly platform and live on-hand experts ensure a smooth, easy, and intuitive user experience. From crime to D&O insurance, whatever specific insurance your growing business or startup needs, Embroker has got you covered.
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