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? 

Fortunately, a local independent insurance agent can help you protect your business against data breaches and other common cyber threats. They'll get you matched to the right cyber insurance policy for your unique company. But until then, let’s take a closer look at business insurance and cyber liability coverage.

Does My Business Insurance Cover Cyber Liability?

The answer depends on your specific policy. As businesses today rely on technology like computers for 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 own a small business, you can purchase a business owners policy (BOP) with cyber coverage. You can also purchase a separate Cybersecurity insurance policy to protect your company, regardless of its size. If you’re unsure of whether your existing policy covers cyber liability or not, your independent insurance agent can find out for you.

What Is Cyber Liability Insurance?

Cyber liability insurance is 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 cyberattacks. Cyber liability insurance has traditionally been offered as an add-on coverage with business insurance, though coverage is more commonly included in standard policies today.

Even if your business isn't the most technologically dependent, if you use a computer for anything, you could be at risk of cybercriminal attacks. It’s 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 before an incident like a data breach ever occurs.

First-Party Cyber Coverage vs. Third-Party Cyber Liability

There are two main types of cyber liability coverage your business can choose from:

• First-party coverage: This type of cyber liability insurance is designed so that the insurance company pays any incurred expenses directly to the organization after a security breach.
• Third-party coverage: This type of cyber liability insurance policy covers settlements and damages incurred by the organization for suits or claims for injuries after the organization's actions or failure to take action.

An independent insurance agent can help you choose the right kind of cyber liability policy for your organization.

What Does Cyber Liability Insurance Cover?

Cyber liability insurance covers data and sensitive information 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, many policies offer a handful of common core coverages.

Cyber liability policies often include the following protections:

• Business interruption and loss of income: Covers a potential loss in profits due to suspended or limited operations caused by a data breach or other cyberattack.
• Public relations expenses: Covers potential damage suffered to a business’s reputation stemming from media coverage following a data breach or other incident, and the services necessary to restore its reputation.
• Legal expenses: Covers lawsuits (i.e., including attorney, court, and settlement costs) stemming from customers’ sensitive information, such as credit card numbers, being 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.
• Media liability: Covers the costs of intellectual property infringement, including online and printed advertising and social media accounts.

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.

Additional Protection Offered by Cyber Liability Insurance

Cyber liability insurance can offer many benefits, many of them related to fast incident response and crisis management after a data breach or another cybercrime. Here are a few additional protections offered by these policies.

• Data breach coverage: This can reimburse your business for many of the costs associated with a data breach, including professional services to repair your computer systems and increase security.
• Additional liability coverage: This includes network security liability and privacy liability, which can help cover the costs of third-party claims of harm caused by a data breach or another cybersecurity incident at your business.
• Ransomware and cyber extortion: This can pay for expenses related to incidents of cyber extortion, in which cybercriminals steal or seize control of sensitive systems or data and demand a ransom in exchange. These attacks may be instigated by the installation of ransomware on your business's computer systems. Cyber liability insurance can pay to remove this malicious software. 
• Data recovery and digital asset restoration: This can reimburse your business for professional services used to help recover stolen or compromised data and restore digital assets after a breach or other cybercrime.
• IT forensic expenses: This can pay for the cost of consulting IT forensic investigation and recovery services after a breach or other cybercrime.
• Regulatory fines and penalties: This can pay for expenses stemming from an ordered Federal Trade Commission (FTC) investigation by a customer or another third party affected by a data breach at your business.
• Credit monitoring services: This can help pay for professional credit monitoring services for customers and other affected third parties after a data breach or incident at your business.

An independent insurance agent can further explain the benefits of having a complete cyber liability insurance policy to protect your 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.
• Funds transfer fraud: This involves a cybercriminal initiating or redirecting a money transfer from another user so that they receive the funds instead of the intended party.

Independent insurance agents are also familiar with common types of electronic fraud and digital threats to businesses. 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 almost 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 necessary to protect it from various potential cyberattacks.

How Much Does Cyber Liability Insurance Cost?

The average cost of cyber liability insurance is $145 monthly, or about $1,740 annually. The cost of your unique business's coverage may vary, though, depending on several factors, such as your company's size, location, and annual revenue. An independent insurance agent can help you find affordable cyber liability insurance near you.

What Else Does Business Insurance Cover?

In addition to digital threats, business insurance offers various other important protections, including coverage 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 or due to work duties. Coverage is mandatory in most states, depending on company size and the type of work being performed.  
• General liability: Covers personal property damage or bodily injury claims made by a third party. 
• Business auto: Covers company vehicles against perils like theft, vandalism, and natural disasters.
• Commercial property: Covers loss of or damage to your physical property, including tools, equipment, inventory, and 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 Business Insurance Cover?

Standard business insurance policies have two main perils that are almost 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. 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 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 numerous other 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:

• Crime insurance: Covers losses resulting from 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 losses or harm 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 Can Help

When it comes to protecting your business against theft and other perils, no one’s better equipped to help than an independent insurance agent. These 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.