Small Business Series: Cyber Insurance?

Apr 13

Cyber insurance, also known as cybersecurity insurance or cyber liability insurance, is a type of insurance that provides coverage to businesses and individuals in the event of a data breach, cyber attack, or other type of cyber crime. Cyber insurance can help businesses recover from financial losses, reputational damage, and legal liabilities that may result from a cyber incident and can be an important part of a risk management plan.

Cyber insurance policies typically cover a range of expenses associated with a cyber attack or data breach, such as:

Notification and credit monitoring costs: If customer or employee data is compromised in a cyber attack, businesses may be required to notify affected individuals and provide credit monitoring services. Cyber insurance can help cover the costs of these services.
Business interruption: A cyber attack may cause a business to shut down operations temporarily. Cyber insurance can help cover lost income and other expenses related to the interruption.
Legal fees and settlements: If a business is sued as a result of a cyber incident, cyber insurance can help cover legal fees and settlements.
Cyber extortion: Some cyber insurance policies cover expenses related to ransomware attacks and other types of cyber extortion.

Cyber insurance is becoming increasingly important for businesses of all sizes as the frequency and severity of cyber attacks continues to rise. According to a report by Cybersecurity Ventures, cybercrime is expected to cost the world $10.5 trillion annually by 2025.

Some high-profile examples of cyber attacks include the 2017 Equifax data breach, in which the personal information of 147 million consumers was exposed, and the 2021 Colonial Pipeline ransomware attack, which resulted in a temporary shutdown of the largest fuel pipeline in the United States.

While cyber insurance can provide important protection for businesses, it is important to note that not all policies are the same. Coverage may vary depending on the insurer and the specific policy. It is important to work with an experienced insurance agent or broker to ensure that you have the right coverage for your business's needs.