Why do I need cyber insurance for my business?
3 minute read Published on Sep 30, 2022 by BrokerLink Communications
We often hear about data breaches and cyber-attacks on large businesses however, small to medium size businesses are not immune to cyber-attack and may be considered soft targets, because they are often unprepared for this unexpected, overwhelming situation that puts their livelihood at risk.
So, whether your business is small, medium, or large, it’s important to have the right insurance to protect you, your employees, and your customers from a cybercrime situation.
What risks do you face from a cyber-attack?
Many business systems contain sensitive information that belongs to others, like customers and employees. For example, your business may store social insurance numbers, tax records, credit card data, medical records, and more. If any of this data is lost or compromised by a hacker, it can impact your business significantly in terms of costs and reputation.
The number of devices and applications your business uses increases your risk and makes you more vulnerable to cyber attacks. Having cyber insurance coverage that’s tailored to your organization’s needs can help recover your losses.
What is cyber insurance?
Cyber insurance offers different types of coverage to respond to a situation in which your business experiences a cyber breach as outlined in your policy.
- First-party coverage, also called cyber liability insurance, is purchased to cover you in the event that your business experiences a data breach involving sensitive information which can include social insurance numbers, credit card information, health records or other company data. Some of the services that may come with this coverage include: notifying impacted customers, credit monitoring and public relations support to help repair the company’s damaged reputation. First party coverage can also help pay to recover data in the event of a ransomware attack.
- Third-party coverage is often purchased by businesses responsible for managing its customers’ data security. If the company’s customer experiences a data breach or cyber attack, the coverage will help pay for your legal fees and any settlements incurred.
How does cyber insurance work?
Cyber insurance coverage helps you mitigate expenses, support your customer outreach initiatives, and it can help support other recovery steps needed to get your business back to work.
Cyber insurance typically covers various risks that can impact businesses both large and small, including:
Hacking
Which occurs when someone compromises your digital devices and networks through unauthorized access to your business’ computer systems.
Social Engineering
This occurs when an attacker pretends to represent a trusted organization to trick a user into taking an action (such as opening a malicious attachment or clicking on a bogus link) that he or she would normally not take.
Ransomware
This type of software encrypts files to prevent users from accessing them and then demands payment for their safe recovery. These attacks can occur after a user clicks on a phishing link or visiting a compromised website.
Data Breaches
These are security incidents where information is accessed, stolen, and used by a cybercriminal without authorization.
Malware Attack
This is harmful software that takes control of a machine, monitors user actions and keystrokes, and/or sends confidential data from the infected computer or network to the attacker’s home base.
Spoofing
This applies to a cyber criminal impersonating another user or device to attack network hosts, steal information, spread malware, or bypass access controls.
For example, an employee in the shipping department of an electronics manufacturer receives a phone call from a retailer who has an open order. The retailer advises that they would prefer the order to be shipped to their warehouse as their store location does not have space. The employee adjusts the address information on the order and ships the product. It is later discovered that a fraudster spoofed the retailer’s telephone number, and the retailer never received their order.
Many cyber insurance plans include risk prevention services that offer proactive guidance to ensure you have proper security policies in place, such as credit monitoring, backup and safe storage of files, as well as tools such as endpoint security software that are up to date to help minimize risk.
Get cyber insurance today
One way to help prepare for the impact of a potential cyber threat to your business, is to purchase cyber insurance.
Contact your local BrokerLink branch today to speak with one of our business insurance experts who can tailor your cyber insurance policy to fit your unique business needs.