Do I Need Cyber Liability Insurance for my Business?

Do I Need Cyber Liability Insurance for my Business?

 

Unfortunately, small businesses do not face a shortage of risks in today’s ever-evolving business environment.  What makes cyber risks unique is the dramatic increase in the frequency of attacks against small businesses in the last few years.  In their 2019 Identity Breach Report, cyber security firm 4iQ reported a 425% increase in cyber-attacks to small businesses in the past year alone.   In addition, the varied costs of a cyber-attack are often too large for a business to bear.   They can include ransoms, lost data, business interruptions, fines, fees, and even potential lawsuits.

When you add it all up cyber-attacks against small businesses are happening much more frequently and the financial consequences are getting much more severe.

So what kind of businesses needs cyber liability insurance?

Any type of commercial entity including businesses, non-for profits, municipalities, etc., that collects, processes or stores personal or financial data of customers and/or employees is a target and therefore needs some level of protection.  Unfortunately, standard business liability policies including business owner policies do not cover cyber-attacks.  A separate policy or endorsement is required for coverage.

Investing in anti-malware, data encryption, and cyber training for employees can greatly reduce the risk of an attack but will not eliminate it.  A well-built cyber policy is needed to transfer the risk, provide a failsafe, and guarantee that business can continue after an attack.  Cyber liability policies may also provide secondary benefits that include risk mitigation tools and cyber-attack response assistance that would otherwise be costly or unavailable for a small business owner.

Cyber liability coverage is a critical part of any business’s insurance and risk management strategy.   Without it your business is solely responsible for data breaches or business interruptions caused by a cyber occurrence.

If you need to add cyber liability coverage, or just want to review your current strategy, feel free to contact us today 636-536-2229.

 

By Travis Johnson, Broker

636.536.2229 x 5 | TravisJ@ThomasInsuranceAdvisors.com

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