Your business’s greatest risk is likely not a five-alarm fire, but rather a cyber attack. 60% of small businesses go out of business in six months following a cyber attack and 43% of all cyber attacks are against small businesses. You need cyber liability insurance.
Cyber liability policies have two basic parts to them, first-party liability and third-party liability.
First-party liability covers you in the event you have a cyber liability incident. Third-party liability covers you if you are part of a claim that you were involved with but was on someone else’s network or system.
Within first-party liability is ransomware (cyber extortion) and is arguably the most useful part of the policy. In the event of a cyber incident where you are held for ransom (extortion), this coverage pays the ransom. Make sure the policy pays on behalf of you, and doesn’t reimburse you for the ransom. If you’re only covered for a reimbursement then you would need to acquire the ransom in full (and often in a digital currency).
Almost everyone you know has had some form of identity theft. Why do you think someone would be willing to steal your identity in your personal life but not go after your business assets and information?
Here are a few examples of common cyber liability claims.
Your secretary gets an email from you to send an e-check to an independent contractor’s online account. After the financial transfer is done your secretary learns that you have no knowledge of this and someone socially engineered an email to appear to be from you.
Phishing schemes are part of social engineering and account for 91% of cyber attacks.
Your laptop is stolen and someone steals all the information available to them with the prefilled passwords on your laptop. You lose client’s information as well as your own. The cyber attacker purchases items and falsifies your client’s identity with the info they stole from your computer.
Cyber liability insurance is one of the most useful insurance policies you can have and the rates and availability will only become more unfavorable as time goes on. Cyber limits are typically anywhere between $1mm and $5mm.