What is cyber liability insurance?
Cyber Liability Insurance cover has been in existence for a long time, far longer in fact than the concerns of cyber security have been prominent. The question to ask then is why is Cyber Liability Insurance not a well known type of insurance cover which modern businesses use to protect their business?
Cyber Liability is quite a broad term and can be used to cover a range of types of cover. For example, at the moment the term Cyber Liability Insurance tends to be linked to around three different types of cover.
- Data Breach Cover: Helps businesses comply with laws and regulations in the event of a data breach. This could potentially include customer personal data being stolen.
- Extortion Liability cover: Have you heard about the ransomware attacks causing havoc to all types of businesses? Extortion Liability cover is set up to protect your business against such criminal acts.
- Network Security Liability Cover: Protects the insured against losses for the failure to protect customer personal information.
Who is Cyber Liability Insurance for?
Cyber Liability Insurance is for any business which handles sensitive customer information. This does not only include financial information but also names and addresses. Moreover, any business reliant on a computer system to conduct operations should make sure they are protected. It is imperative that both your own and your customer data is protected in the event of a security breach.
Many businesses make the mistake of assuming that they will not be targeted due to not having a high turnover or low profits. However, reports found in 2017 that nearly half of UK businesses had been targeted by cybercriminals.
The lesson to take from this? Don’t assume your business is safe just because you are not turning over millions of pounds. Every business is vulnerable.
The Risks of Cyber Crime
We’ve said it before and we’ll say it again. Cybercrime is on the rise and is showing no sign of slowing down. Your business could incur losses directly as the result of a cyber attack.
So what are the main risks for your business which mean that cyber liability insurance is becoming a must-have for every business?
Firstly one of the most worrying and popular trends taking to the cyber industry in recent times is cyber extortion(Ransomware attacks). This is when a hacker tries to hold your business to ransom by accessing your computer system and then threatening to delete important company data or even publish it online.
Cost of a Breach
In addition to this the costs of breaches are also a concern for businesses. Costs such as legal advice,notification of customers or regulators and offering support such as credit monitoring to affected customers can be costly; dependent of course on the scale of the breach which has occurred. Is it really worth taking the risk?
Loss of income, customer anxiety and general loss of productivty can also prove costly for any business- big or small. A hacker infiltrating your system can seriously interrupt the way your business is run and could lead to hours or even days of downtime. Can your bussiness afford to be inoperable for an extended period of time? Having a form of cyber insurance cover allows for compensation if business interruption were to occur.
What will the costs be to repair, restore or replace computer systems which have been destroyed by hackers? Could your business afford to replace one computer system never mind one for each and every single member of staff? Having a form of cyber insurance cover just seems like common sense to us.
Must Do’s when trying to protect your business
Investing in some form of cyber liability insurance cover seems to be looked at as a big deal for business owners. Maybe this is because they don’t think there business will be targeted. The more realistic reason? They simply can’t be bothered.
There are some precautions however that businesses can take before having to rely on cyber insurance. Whilst these aren’t guaranteed methods of protection, they certainly can provide an extra line of defence against hackers.
- Regular staff training: Hackers are constantly updating the methods that they use to attack your business. Regular staff training can keep your business ahead of the game and potentially stop any breaches to your company.
- Data encryption: A different prospect to password protection. Encrypting your data scrambles your data and can only be accessed with a decryption key. This tends to be considered to be much safer than password protection.
- Keep up to date with changes in legislation: It is essential that you keep you and your business up to date with any changes in the law to make sure the practices you are using do not become invalid or outdated without your knowledge. A simple way to do this is to read news articles and blogs regarding changes in the cyber security industry or even just insurance and business journals in general.
Lessons to be learned?
Cyber Liability Insurance covers multiple areas in relation to protecting your business against online criminals acts. The various types of cover mean that you should be picking a policy which is relevant to your business. Moreover Cyber Insurance should be used as a method of protection for your business but only as a last resort. Simple steps such as regular staff training and data encryption can also contribute towards an environment which is safer from the dangers of cyber criminals.