5 Reasons Cyber Security Insurance Is Becoming More Important Than Ever
With more businesses moving their data into the cloud, there is more emphasis on keeping data secure – both for the business and for the private data of consumers. While cyber security is a top priority for many business owners, many still overlook the need for cyber security insurance, especially new and small businesses. This type of insurance doesn’t protect you from potential cyber-crimes, but it will help you recover from cyber-attacks and prevent you from going out of business.
5 Reasons to Consider Cyber Insurance
1. Help with Legal Fees and Liability
The primary purpose of insurance for cyber security is to cover any legal fees and liabilities you may have in the event of any data breach. It might not seem like it, but recovering from a data breach is an expensive task that takes hundreds of thousands – or even millions – of dollars depending on the size and severity of the breach.
The legal fees associated with cyber security risks are usually the result of post-breach responses that are mandated by state and federal law. On top of the cost of notifying all consumers who may have had data leaked, your company is also responsible for remediation expenses and other fees associated with loss of data. Part of your insurance coverage will likely involve referrals to legal specialists and forensic recovery specialists to help your business get back on its feet after the data breach and costly legal process.
2. Data Breach Insurance for Hacks
Data breach insurance is one of the most important tools in your arsenal when it comes to hacks. All companies are responsible for data storage, both for the company and for the private data of users. Companies also rely on their employees to stay vigilant and not succumb to phishing or social engineering tricks. Whether it’s internal bad-actors or third-party hackers that breach data protections, it’s essential that you have insurance to cover potential hacks. Ransomware attacks are on the rise, so even small businesses should be aware that they are at risk.
On top of covering notification and remediation costs, data breach insurance can also be used to cover expenses related to responding to the data breach, recovering from the breach, revamping cyber security to prevent future breaches, and following recommendations with regulatory investigators that will be assessing your liability in the breach. Cooperating with each of these steps can quickly add up and cost significant out-of-pocket expenses without insurance.
3. Lower Business Financial Risk
Because covering the costs of a data breach is expensive, it can be extremely helpful to have insurance for cyber security and data breaches. This insurance will take the financial heat off your back so your business will experience less financial risk in the wake of a breach. Your insurance company will cover a significant portion of all the up-front costs associated with your legal fees and recovery, and that will ultimately help your business get back to standard operations more quickly. Many small businesses have gone bankrupt after unfortunately experiencing a cyber-attack, simply because the costs to deal with the fallout quickly spiral.
4. Cover Lost Profits and Business Interruption Costs
Another thing insurance for cyber security will do is cover the potential loss of profits and business interruption costs associated with a data breach. Most of the time, when there is a data breach or other significant cyber-crime, it’s imperative that your business operations shut down to prevent any further data theft, and because you must spend time recovering the data and restoring your systems. When the main force of your business shuts down after a breach, you will inevitably lose profits that could be made during that time. When loss of profits is compounded with recovery and remediation fees, many business owners are looking at steep costs that can be difficult for financial recovery.
Fortunately, this type of insurance can replace any loss in profits that occur as a result of business interruption. In the short-term, that means that you can continue to pay employees; in the long-term, this means that you will be able to maintain the momentum of your business throughout your recovery and stay in business.
5. Media Liability and Reputational Harm
There’s no getting around it – on top of legal fees and other costs that incur after a data breach, many businesses also have to deal with media liability. Media liability is usually related to cyber security in the event that an employee leaks information about private data online, or otherwise makes claims publicly that create cyber risk for your business. This type of insurance will help cover the costs of correcting and defending claims or leaks.
Naturally, the harm to your reputation can also be extensive. Because data breaches often mean personal data and data related to business partnerships are compromised, it’s important that you pay attention to the way any data breaches are handled publicly. Data breach insurance will help you pay for public relations that will help you keep the reputation of your business in-tact. Your insurance provider should help connect you with the right professionals.
As a modern business, you need to be aware of your cyber risk and how you will handle the recovery of any potential data breaches. Recovering from data breaches can be an expensive process that many businesses aren’t prepared to cover. Having the right insurance can lower your overall risk and allow your business to recover.
We encourage all business owners to take our free cyber risk assessment that returns results on your company’s cyber risk in just minutes. Based on your results our experts can work with you to determine the right level of cyber policy to protect your company in the event of an attack or a breach.
NOW Insurance provides insurance that is simple fast and affordable. Get a cyber quote from our easy online application.
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