Does My Business Insurance Include Cyber Liability Protection?

Business owners have to consider all kinds of threats, from the obvious to the obscure. But it’s not just physical property that needs to be protected, electronic data and information need just as much coverage thanks to modern business practices. But did you know that your business insurance doesn’t cover data breaches unless you have the right protection? The good news is that we know, so you don’t have to.

Independent insurance agents know all about business insurance and the additional coverages needed, too. They know exactly how to protect your business against data breaches and other common intrusions by cybercriminals. But before we get ahead of ourselves, let’s take a closer look at business insurance and cyber liability coverage.

Does My Business Insurance Cover Cyber Liability?

Well, it depends. As businesses today rely on technology like computers for more and more daily tasks, certain insurance companies are starting to include cyber liability coverage in their business policies. However, as far as standard business insurance goes, typically cyber liability coverage is still an optional add-on. If you’re unsure of whether your policy covers cyber liability or not, your independent insurance agent can find out for you.

What Is Cyber Liability Insurance?

At its core, cyber liability insurance is basically a contract between a business owner and an insurance company in which the insurer agrees to cover losses from liabilities and other costs stemming from data breaches and other cyber-attacks. Cyber liability insurance has traditionally been offered as an add-on coverage with business insurance, though coverage is becoming included in standard policies increasingly often.

While your business may not be the most technologically dependent one around, really if you use a computer for anything, you could be at risk of attacks by cybercriminals. It’s much better to be proactive and get your business set up with the proper coverage before it’s too late, as many business owners have unfortunately had to learn the hard way. Make sure to talk to your independent insurance agent about getting covered against cyber liability ASAP.

What Does Cyber Liability Insurance Cover?

Boiled down, cyber liability insurance covers data and sensitive information that’s stored electronically by businesses, as well as monetary transactions and other common uses of computers and the Internet. While cyber liability policies are not standard and can vary slightly, a handful of common core coverages are offered by many policies across the board.

Cyber liability policies often include the following protections:

• Loss of income: Covers a potential loss in profits due to suspended or limited operations caused by a data breach or other cyber-attack.
• Costs due to damaged reputation: Covers potential damage suffered to a business’s reputation stemming from media coverage following a data breach or other incident.
• Legal expenses: Covers lawsuits (i.e., including attorney, court, and settlement fees) stemming from customers’ sensitive information such as credit card numbers getting stolen and sold by cybercriminals, or banks suing your business for having to cancel these stolen cards.
• Hired professionals: Covers hired professional help when necessary to repair damage to computer systems or security after a data breach or other attack.

Cyber liability insurance is often flexible, so you can work with your independent insurance agent to assemble a package that includes all the coverage necessary to best protect your unique business.

What Are the Most Common Digital Risks to Businesses?

When it comes to cybercrime, the possibilities are practically limitless. But rather than let that be cause for alarm, allow it to be an inspiration to get set up with adequate coverage, instead. It helps to start with knowing some of the most common digital threats today’s businesses face, including:

• Malware: Malicious software designed to damage a business’s server, network, or single piece of hardware such as a computer. Common examples include viruses and ransomware.
• Viruses: Malicious programs designed to be spread between multiple computers and other devices on a network to give cybercriminals an entry into your system.
• Ransomware: Another type of malicious software designed to restrict a computer’s usage until the cybercriminal gets paid a ransom. Typically transmitted through phishing emails.
• Phishing: The act of deliberately using emails or sketchy links to infect a computer or system with malware which then obtains important, private data or other sensitive information. Users typically fall for phishing attacks because the emails or website links appear to have been sent by a familiar contact or trusted organization.

Independent insurance agents are familiar with common digital threats to businesses, too. They’ll be able to help you find a cyber liability policy that covers all the basics, and then some.

When Do I Need Additional Cyber Liability Coverage?

If you run a business, it’s pretty much a guarantee that it would benefit from having cyber liability coverage. If your regular business insurance policy doesn’t include coverage, it’s critical to close this gap by adding a cyber liability policy. Whether your business operates entirely online or only ever logs onto the Internet for email, it’s still absolutely necessary to protect it from various potential cyber-attacks.

What Else Does My Business Insurance Cover?

Other than digital threats, business insurance provides many other important protections, such as for physical property and inventory. Standard business insurance policies provide these common critical protections:

• Workers’ compensation: Covers financial losses if your employees become ill, get injured, or die from a work-related incident. Coverage is mandatory in most states, depending on company size and the type of work being performed.  
• General liability: Covers property damage or injury claims made by a third party. 
• Business auto: Covers company vehicles against perils like theft, vandalism, and natural disasters.
• Property insurance: Covers loss of or damage to your physical property, including your office space’s structure. Protected mishaps include fires, storms, and more.

Though these are the basic coverages included in standard business insurance policies, you can always add on more types of coverage to get the full picture of protection.

What Doesn’t My Business Insurance Cover?

Standard business insurance policies have two main perils that are never covered, including flood damage and earthquake damage. Special flood insurance and earth movement policies would be required to protect your business from damages and/or suspended operations caused by these types of disasters.

If your business is located along a coast or other area that’s prone to flooding, your mortgage lender may actually require you to purchase flood insurance. Otherwise, flood insurance is still a really good idea to have if you’re in a flood-prone area. Coverage is only available through the National Flood Insurance Program, which is a part of FEMA. Likewise, if your business is in an area prone to earthquakes, landslides, etc., you’ll want to consider an earth movement policy.

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What Other Add-On Coverages Should I Consider?

There are so many aspects of businesses that need protection, and not all of them are obvious. Beyond your digital and physical property and workers, there are still plenty more areas where your business needs coverage. Fortunately many common add-on coverages easily take care of the most frequent types of business claims.

Optional add-on coverages to business insurance include (but are not limited to):

• Crime insurance: Covers losses due to criminal activity such as theft or fraud. Coverage even applies to employees who steal from the company.
• Business income: Covers the financial loss suffered while a business is closed due to fire damage or other disasters.
• Professional liability:  Also known as "errors and omissions insurance," this coverage protects against claims made by clients who have suffered financial loss due to the work they've hired you for.
• Boiler & machinery: Also known as "equipment insurance," coverage applies to electric equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc.

Your independent insurance agent can help you brainstorm all the areas in which your business could benefit from additional coverage. The more complex your business, the more coverage will be necessary.

Here’s How an Independent Insurance Agent Would Help

When it comes to protecting your home-based business against theft and other perils, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who specialize in cyber liability and business insurance, deliver quotes from a number of different sources and help you walk through them all to find the best blend of coverage and cost.