Cyber liability insurance is a critical investment for any small business that stores third-party data onsite or in the cloud or provides information technology (IT) solutions to other companies. It can help pay for third-party claims against your business after data breaches or cyber-attacks.
What Does Cyber Liability Insurance Cover?
Whether you store individual customers’ or third-party business data, either party can hold you liable for the theft or compromise of their information during a cyber-attack on your computer network. If the data breach victim sued your firm to recover damages, having cyber liability insurance would offer you significant financial protection.
The policy can help in numerous liability scenarios, such as the compromise of customer information after criminals access your employee’s lost smartphone. It can also cover financial loss claims if a denial of service (DoS) attack prevents you from fulfilling customer orders. Covered third-party claims/costs include:
- Legal representation and court fees
- Out-of-court settlements
- Compensation ordered by a court
- Noncompliance penalties
Technology Errors & Omissions with Cybersecurity Liability Insurance
A technology E&O policy covers similar third-party claims to cyber liability insurance and is important to have for small businesses that offer tech solutions. However, it only applies to cyber incidents that impact the third party directly as opposed to the policyholder. Suppose you provided software to a B2B client whose computer was breached due to a security flaw in your product. Technology E&O would cover you if the client sued you for damages resulting from the cyber incident.
Does My Business Need Cyber Liability Insurance?
Consider getting cyber liability protection if your small business stores any sensitive/personal third-party data, such as Social Security or credit card numbers. Whether you’re a business-to-business or business-to-customer company, the digital information you keep creates a potential cyber liability in the event of a data breach. Also, you may need liability protection if you provide IT solutions.
What Are Cyber Liability Insurance Exclusions?
Cybersecurity policies do not cover the following items:
- Hardware damage as a result of a cyber-attack (commercial property insurance covers this risk)
- Loss/theft of intellectual property
- Self-inflicted damage, such as if a business committed a cybercrime
- Cybersecurity upgrades to reduce the risk of a data breach
Where Do I Get Cyber Liability Insurance?
You can purchase cyber liability coverage through a reputable insurance agent or carrier, usually as part of a standalone cybersecurity policy. Sometimes, the protection is available as an add-on to general liability insurance or a business owner’s policy (BOP). Cybersecurity policies can also include technology E&O coverage.
How Much Cyber Liability Insurance Do I Need?
Cybersecurity coverage of about $1 million can offer most small businesses enough protection against common cyber incidents, including third-party claims. Since cyber liability risk profiles vary widely, you should speak with an insurance agent to determine your exact coverage needs.
Cover Your Cyber Liabilities with Cyber Insurance at 01 Insurance
A cyber-attack on any business can cause devastating and sometimes irreversible financial loss. Without proper cybersecurity coverage, very few small firms can survive a major cyber incident. That’s why it’s important to have sufficient cyber liability insurance for your company. To learn more, contact our agents at 01 Insurance today. We’re happy to help audit your risk profile and recommend cost-effective coverage for your business’s unique needs.