We’ve all heard the rumors about companies selling customer information for one thing or another, usually without the customer’s knowledge. Not to mention, the whole conspiracy that our devices are constantly listening and watching our daily lives (go ahead and mention your favorite fast food restaurant out loud in a conversation, and then go scroll through some social media feed for a few minutes). With all parts of our world gradually transferring to cyberspace, cyber security is something every business needs to strengthen, whether a big corporation or a small local one.
What is cyber liability insurance?
Cyber liability insurance isn’t cyber security in itself—always take care to use strong passwords, only visit secure sites, learn to identify reliable sources vs scams, all that good stuff. But this insurance does help protect a business when breaches and cyberattacks occur, costing the business in various ways. There are typically two types of coverage within cyber liability insurance:
First-party coverage: this covers immediate expenses. This can include things like ransom costs (which will be covered later), expenses that stem from a business being down, cost of repairing damaged software/hardware, notifying employees and customers, etc.
Third-party coverage: this covers expenses incurred from lawsuits, fees, or legal claims brought on by the breaches or attacks.
In short, cyber liability insurance covers a business when they face expenses from cyber security breaches and attacks, data theft, privacy issues, virus transmission, and even things like trademark and copyright infringement.
Something to be aware of: not all cyber liability policies include coverage for social engineering, which is when a person tricks or manipulates you or an employee into transferrin gover company funds.
Why should small businesses be extra concerned?
Recently, there has been an increase in ransomware attacks. A ransomware attack, in the simplest explanation, is an attack sent by hackers who either lock a user out of their data or encrypt the data so that the user can’t use it. After attacking the data, the hacker will demand a payment from the user (hence, ransomware),typically with a very short deadline and very high price.
These attacks can take place after a user clicks on a link or downloads an email attachment from those infamous phishing emails. However, you and your employees can be smart and cautious enough to evade all the scam emails that come your way, and still these attacks can get through. Sometimes there are holes in cyber security software, which are usually fixed with patch updates (so always update your computer!). But before there is a patch to fix the hole, attacks can slip through without any user interaction at all on your part.
Now your business is faced with not only taking the financial hit from paying the ransom, but it is also faced with the possible loss of that data (paying the ransom doesn’t guarantee anything), loss of revenue while the issue is dealt with, and potential customer loss.
What does this have to do with small businesses? Wouldn’t hackers go for large corporations who can afford to pay all sorts of ridiculous ransoms? Well, if large corporations have the money to pay the ransoms, they also have the money for increased cyber security. Small businesses often do not.
That’s a lot of information, and I’ll pretend I understand it…what do I do now?
Maybe it’s just me, but cyberspace is vast and confusing, and there are a lot of concepts I only barely understand. Regardless, it’s important for all businesses to protect themselves and their customers (especially when there is personal identification information at risk), first through cyber security and awareness, and then through cyber liability insurance. Talk to a local independent insurance agent at Town & Country Insurance today to add Cyber coverage to your business protection plan!
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