Cyber Liability Insurance: Does Our Business Need It?
April 25, 2023
Very few businesses these days can get by without an online presence or without the use of computers or even cloud-based services or social media. Because of this, if you are operating a business in or around Chandler, Arizona, or are in the process of launching one, it is essential to explore your cybersecurity and data breach insurance options. To discuss your particular enterprise’s exact needs, contact us at Arnett & Arnett, PC.
We have more than 30 years’ experience in dealing with insurance companies and can advise you of your optimal needs in the age of the World Wide Web. We can also represent you in a claim against a policy should the insurer opt to stonewall or deny your claim.We proudly serve clients not only in Chandler, but also in Phoenix, Tucson, Flagstaff, and throughout the state of Arizona.
What Is Cyber Liability Insurance?
Virtually every business owner understands that hacks, data theft, ransomware attacks, and other cyber and data threats are out there, but many ignore these possibilities, thinking they only happen to large business entities.
Wrong. Many breaches are focused on small businesses since the hackers and cyber criminals out there realize the smaller players are an easy mark since they probably don’t carry insurance or spend the money and focus enough resources to protect their assets and their customer data from compromise. However, data theft or another cyber-attack can spell doom for a small business.
This is not to say that medium or larger-sized businesses don’t also need to set up firewalls, enforce security standards, and purchase cybersecurity and data breach insurance. All businesses that rely on cyber and web-based services need to exert every effort to protect themselves, their customers, and their clients.
Cyber liability insurance helps cover businesses that suffer data breaches or other threats and thefts. Cyber-attacks are common, especially for small businesses that are focused on expansion—and basic survival issues—and often don’t take the threat seriously enough.
Security Magazine reports that “more than two-thirds (67%) of companies with fewer than 1,000 employees have experienced a cyber-attack, and 58% experienced a breach." A cyber-attack averages $200,000 in claims and losses, often resulting from the theft of personally identifiable information (PPI) such as Social Security numbers, credit card information, and other sensitive data.
Cyber liability insurance can do the following:
offer indemnity for legal fees and expenses;
help pay to notify customers of a breach (as required by state and federal legislation);
cover costs for the recovery of compromised data; and
compensate for the costs of damaged computer systems.
However, these policies are not responsible for avoidable mistakes on the business’s part, nor for negligence or lack of security oversight. Getting the support of skilled insurance attorneys can make all the difference.
Types of Cyber Liability Insurance
Cyber insurers generally break down insurance into four categories:
Privacy liability cyber insurance. This type of policy protects the business from losses associated with the theft of employee or customer sensitive information – PPI, or personally identifiable information as mentioned above -- SSNs, credit card information, and the like.
Network security coverage. This type of policy covers the business in the aftermath of a cyber-attack, including costs associated with notifying customers of the breach, data restoration, identity restoration, and legal and public relations costs.
Business interruption insurance. This can help cover losses from a cyber-attack due to lost time and assets, including reimbursement for cyber extortion.
Technology errors and omissions (E&O) coverage. This type of coverage is for those businesses that develop and market technology or cyber solutions. It can cover claims for product misrepresentation, product mistakes or defects, or negligence.
Why Your Business Needs Cyber Liability Insurance
The major answer here is the cost of a breach or ransom attack. Your business could be subjected to claims from customers and/or clients that could spell the end to your enterprise.
Even if you survive financially, your reputation could be irreparably damaged. Large enterprises can often survive the reputational blow that comes from a cyber incident, but small and midsized businesses may find the path forward strewn with obstacles.
Even the smooth functioning of your business may take forever to recover, if ever. Therefore, cyber liability insurance is a must in the rapidly maturing cyber world we live in.
Understand Your Rights and Options
If you’re currently operating a business, or planning to launch a business, in or around Chandler or anywhere in the state of Arizona, contact us to review your needs and options for cybersecurity. You don’t want a cybercriminal to threaten the future of your business—and your own livelihood as well. Reach out to us at Arnett & Arnett, PC immediately with all your questions and concerns about cyber liability insurance.