Why Should Your Business Carry Cybersecurity InsuranceOctober 19, 2021
It’s very likely that you already have a general liability insurance policy, along with other business-related coverage. However, although most businesses assume cyberattacks are included in these policies, the truth is, they’re not. With the growing number of hacks and breaches every day, cybersecurity insurance is a must-have to protect your business from a devastating cyberattack incident.
Common Uninsured Risks
Every day, your business is at risk of a cyberattack, and currently, there isn’t a 100% foolproof way to secure data. Cybercriminals continue to evolve their approaches and come up with increasingly sophisticated attacks.
While data security management services help to drastically mitigate your risks, all it takes is an employee innocently opening the wrong email to unleash malware or ransomware on your systems. An employee could also be duped into believing a hacker is their manager and following instructions to transfer funds or account information.
If your business is breached, hackers could steal money, personnel information, customer data, and other valuable data. Without cybersecurity insurance, you’re left to shoulder the consequences of these losses on your own. Consider that the cost of having to pay for identity monitoring services for employees and customers after a breach alone can easily ruin a small business.
If money is stolen, you might never get it back. While security experts may be able to track it down, there is no guarantee of that happening. Not only is there no guarantee that they will be able to track down where the money went, you would still have to pay for the tracking service either way, whether they are successful or not.
Bottom line, although your current policies might cover natural disasters, they do NOT cover digital and virtual disasters.
Small Businesses Don’t Think They are Vulnerable
An August 2021 CNBC Small Business Survey conducted July 26-August 3 among over 2,000 small business owners across the U.S. showed that most small businesses (56%) were not worried about cyberattacks. They believed that if they were hacked, they would be able to respond to it, although many admitted to not having a formal cybersecurity response plan in place.
This belief appears to be off the mark, because a 2019 Verizon Data Breach Investigations Report revealed that 43% of victims that year were actually small businesses. Furthermore, research conducted by the National Cyber Security Alliance found that 60% of hacked SMBs go out of business after six months.
Cybersecurity Insurance Fills in the Gaps
Cybersecurity insurance fills in the gaps presented by your digital threats. Although it’s something you hope you never have to use, you need these policies to help your business recover after a breach or hack. Whether it’s due to simple human error, using outdated software and hardware, or not securing your network, you will have the peace of mind that you’ll be covered.
Depending on your exact policy and provider, cybersecurity insurance can cover a variety of things, including:
- Investigating the incident, trying to find the culprit(s), and recovering money or data if possible
- Handling ransomware negotiations and payments
- Taking care of informing the public
- Covering the cost of identity theft and restoration
- Recovering lost data
- Helping businesses recover from system and security failures
- Covering legal fees
- Aiding in reputation recovery
Attempting to handle all of this on your own is a nightmare. A cybersecurity insurer already has experts on hand that understand all the intricacies of handling a security incident. From PR to forensics, everything is included in your policy–you don’t need to line up everything yourself.
Just like any other incident, such as someone getting hurt, or equipment being stolen from a break-in, you never know when the worst might happen. Cybersecurity insurance is there to help you recover.
Common Costs of Cybersecurity Insurance
The average cost of cybersecurity insurance in the United States is $1,485 per year. The average plan includes $1,000,000 liability limits with a $10,000 deductible. In California, the average is slightly less at just $1,430 per year.
Naturally costs can vary greatly based on certain factors, such as:
Type of business
Business type can increase or decrease your overall risk. For instance, the cost of recovering from a breach for a bank would cost more than a small coffee shop. Companies that don’t store a lot of valuable data have lower premiums.
Number of employees
The more employees you have, the more likely your exposure to cybersecurity risks due to higher probability of human error.
Type of data you store
The more sensitive data you store, the higher risk your company is considered.
Current security measures
Taking a proactive approach to cybersecurity can reduce your premiums. A data security management service provider can help you with this.
Limit and deductible
You can increase your coverage amount and change your deductible. The amounts you choose ultimately decide your final rate.
At GSDSolutions, our IT managed services can help you reduce your risk of a cyberattack, which can also help reduce your cybersecurity insurance costs. We offer IT support in Mountain View and throughout the Bay Area.
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