The Importance of Cyber Insurance
Because cyber threats are always looming, protection is vital not only for individuals but also for businesses. While cybersecurity is still a necessary precaution, cyber insurance may also be a vital part of keeping your business safe. When an attack makes its way through your defenses, this coverage can help ensure your business remains viable and your financial assets safe. The importance of cyber insurance is discussed below along with some things to look for in your business’ coverage.
Cyber insurance can be crucial to securing the safety of a business of any size. In fact, more than 60% of data breaches occur at small and medium sized businesses and over 50% of small businesses close their doors within 6 months of a data breach. Despite that fact, cyber insurance is generally excluded from most property and comprehensive general liability insurance plans. Because of this, it is important for business owners to investigate cyber coverage and ensure that it will be adequate to protect their business in case of an attack.
When considering a cyber insurance plan, here are some of the questions about the coverage that you’ll need to consider as it relates to your business:
- What type of data is covered? Does it matter where this data is stored?
- Does the policy cover:
- prior acts (that you have no knowledge of before the policy begins)?
- third parties?
- hardware replacement?
- software upgrades?
- bodily injury?
- reputation damage?
- situations of social engineering?
- compromised data (corrupted, erased, altered, or ransomed)?
- lost profits?
- Does coverage rely on complete suspension of business operations or will it cover an interruption as well?
- Does the policy address unauthorized disclosure of data or acquisition of data from a third party?
In addition to analyzing these questions, it’s also important to watch out for any security practices the policy may require of your business. Strict adherence to these practices should be a high priority so that there will be no reason to deny coverage on this basis. It’s also important to ensure that coverage applies to cyber attacks committed by those in foreign countries.
Overall, it is not only important to obtain cyber insurance; you should also ensure that the policy you choose reasonably covers all that your business may need in the case of an attack. No matter what kind of business you own or what data you may be dealing with, business owners always run the risk of cyber threats. Working alongside a business attorney knowledgeable about cybersecurity can help you keep your business protected with both the best cybersecurity practices and choosing which insurance will best suit your needs. I’m happy to set up a meeting to discuss this as well as how else I can help you and your business.
The information presented here is for general educational purposes only. It does not constitute legal advice and does not create an attorney-client relationship.