Cyber liability insurance has become one of the most important forms of insurance coverage a business can have. This is thanks to the widespread use of technology and the internet for business operations.
A Brief Overview of Cyber Liability Insurance
Cyber liability insurance covers financial losses that result from hacker activity, data breaches, and other cyber-related events.
There are two distinct types of cyber liability coverage: first-party coverage and third-party coverage. Although, at Cowell James Forge Insurance Group, our cyber liability insurance policies cover both.
First-party coverage reimburses your business for losses that are a direct result of cyber attacks. This includes the cost of informing clients and customers about the breach of their sensitive data.
Third-party coverage pays for losses that result from lawsuits and claims filed by people who were affected by the cyber attack.
For example, if a client sues your business for allowing their information to fall into the wrong hands, third-party insurance will cover costs that are incurred by the lawsuit.
Why You Need to Invest in Cyber Liability Insurance
There are five major reasons that business owners should invest in cyber liability insurance.
Cyber liability coverage…
- minimizes the risk of extortion
- reduces your liability for breach of sensitive information
- provides more security when using technology
- protects you from laws and regulations that require you to pay fees
- covers the cost of unplanned downtime
Minimizes the Risk of Cyber Extortion
When people think of cyber security and breaches, they likely think of cyber extortion by hackers. This is one of the largest risks associated with running your business using technology and computers.
No computer system or database is impenetrable, and hackers are tricky and clever. If hackers gain control of critical systems, they may demand a ransom to return the information without further harm done.
Cyber liability insurance can cover the cost of the ransom to gain back control of network systems.
Reduces Your Liability for Breach of Sensitive Information
If your company handles sensitive customer information (email lists, home addresses, credit card records, etc…), data breaches are a pervading threat.
If your clients’/customers’ information is leaked or falls into the hands of hackers, it can lead to several issues. Chief among them being identity theft, a soured reputation, and payment of legal fees and settlements. The list goes on.
Cyber liability insurance protects you from lawsuits and covers legal fees that result from data breaches.
Provides More Security When Using Technology
As useful and as profitable as the internet can be, it has also lead to a number of network security risks that were previously nonexistent.
Widespread use of e-commerce, social networking, cloud storage, and other technologies leads to cyber risks like invasion of privacy and stolen data and financial information.
If these issues occur at the expense of your clients and customers, you may be required by law to inform them of the incident and pay for damages.
Cyber liability coverage protects your business from unauthorized access to electronic data or software within your network and computer systems.
It even provides coverage for unintentional actions, mistakes, errors, and omissions that have been committed by employees. Unfortunately, mistakes happen, and they can lead to negative consequences. Cowell James Forge Insurance Group fully understands this and doesn’t penalize you for any internal errors.
As technology becomes more important to running a successful business, cyber liability insurance becomes more important as well.
Protects You from Laws and Regulations
There are laws that penalize businesses for violating privacy agreements or leaking confidential information, whether it is intentional or not. Official penalties typically include payment of fines and fees.
However, there are unofficial penalties as well, including a damaged reputation and loss of business.
Cyber liability insurance can cover the cost of these fines and penalties for you. However, it is worth noting that some coverage may be restricted by state laws.
Covers the Cost of Unplanned Downtime
Cyber liability insurance can cover the costs incurred due to unplanned downtime and business interruptions.
Of course, cyber liability insurance won’t protect you from downtime that occurs as a result of a storm or another non-cyber-related cause. It will only protect you from business interruptions that are a result of cyber security breaches.
For example, an email virus could invade your database, bringing operations to a screeching halt and preventing you from serving clients. Or a hacker could cause a system shutdown, leaving your business unable to operate.
These issues can damage your reputation, impact your revenue, and cost your business a lot of money.
Cyber liability insurance covers the revenue you’ve lost out on, based on your previous financial records. It also covers expenses, such as electricity and internet, that have remained active despite your business operations coming to a halt.
Partner with Cowell James Forge Insurance Group for Top-Notch Cyber Liability Insurance!
As the use of technology and the internet in business grows, so too does the need for cyber liability insurance. It is especially important for small businesses and start-ups, as they might not be able to shoulder the hefty consequences of data breaches and penalties.
Cowell James Forge is one of the premier providers of business insurance in the country. We offer competitive insurance costs, as well as a variety of business insurance plans. These include general liability insurance, risk management, and business owners insurance, among many others.