As a responsible small business owner, you have insurance to protect your business finances. You might have property insurance for your building, or workers compensation for your employees. But what about cyber insurance?
If you’re like most small business owners, you’re likely worried about cyberfraud, (about 75% are), but don’t have cyber insurance (only 18% do).Disclosure 1 It’s a valid concern, as ransomware events were up 102% in 2021 compared to the same period in 2020. And it’s a good time to consider adding cyber insurance for financial protection, as the average ransom demand nearly tripled last year—growing from $450,000 to $1.2 million.Disclosure 2
Want to learn more about how cyber insurance can protect your business, and your bottom line? Here’s some information to get you started.
What is cyber insurance?
This specialized insurance coverage helps businesses reduce the risk of major loss after an event caused by hackers, human error, or technical failure leading to security lapses.
Cyber insurance policies can help manage a variety of threats, including:
- Cyber extortion and ransom demands
- Email phishing
- Data breaches
It can also help manage the fallout and recovery from a cyber-attack, addressing negative impacts such as:
- Reputation damage
- Network security and privacy claims
- Regulatory penalties
- Website media loss
- Network business interruption
- System failures
What does cyber insurance do?
Cyber insurance may provide preventative security guidance, as well as offering financial and crisis management coverage after a data breach or cyberfraud event.
Once you get your policy, underwriters may help implement best practices to prevent and contain ransomware and other types of incidents. They can help uncover vulnerabilities, develop more secure processes, and adopt a proactive stance on cyber security.
In the event of cyberfraud, cyber insurance provides valuable financial protection, improving loss recovery after an event by 70%.Disclosure 3
Cyber insurance carriers also help provide expertise and guidance for responding immediately to a data breach or cyber event, minimizing the resulting financial and reputational damage. Since only 18% of small businesses are confident that their organization is well prepared to manage a cyber event, these resources are extremely valuable.Disclosure 4
How does cyber insurance work?
Insurance carriers and agents work closely with business leaders to identify your business risks. The agent then develops a customized cyber insurance solution based on your organization’s unique risk profile.
Depending on policy details, you’ll get coverage for an extensive list of first-and third-party costs, like:
- Incident response
- Ransom (usually in cryptocurrency)
- Computer forensics to discover entry points and determine if data can be restored
- Digital asset recovery
- Regulatory investigation and penalties
- Legal liabilities
- Data restoration costs
- Legal counsel
- Call centers
- Credit monitoring/identity theft protection
- Forensic accounting
- Business income loss
- Expenses resulting from business interruption and contingent business interruption
- Breach response notification
- Crisis management expenses
This breadth of coverage is critical to protect your business reputation and finances. In a regulatory environment that places increasing emphasis on consumer privacy rights, the potential consequences of an incident mean every business must make cyber risk management a top priority.
Why do small businesses need cyber insurance?
Cyber insurance is a versatile tool that can help business leaders minimize and manage risk to their organizations from the many cyber threats that exist today.
Among small businesses that experienced cyber fraud, fewer than half recover even 50% of the associated losses. However, 46% of victims with cyber insurance recouped 50% or more of their losses, while only 27% of small businesses without cyber insurance managed to do so.Disclosure 1
Today—so much of our business is conducted online. It’s essential to have the right tools to prevent and manage the risks that come with it.
How do I get cyber insurance for my small business?
Your Truist branch leader can connect you with our McGriffDisclosure 5 insurance specialists to design cyber insurance solutions crafted for your small business.