Is Cyber Liability Insurance Important, or Can Your Business Skip It?

Find out whether your BOP covers digital risks or if you need additional protection.

Cyber Liability

When you run a business, you have to consider potential risks from every possible angle, and that includes virtual threats. Businesses of all sizes and categories need the right protection against data breaches, cyberattacks, and more. But did you know your business owners policy doesn’t include cyber liability insurance unless you add it? The good news is that we know, so you don’t have to.

Independent insurance agents know all about business owners policies and the additional coverages needed, too. They know exactly how to protect your business against data breaches and other digital threats. But before we get too far ahead, let’s take a closer look at business owners policies and whether extra cyber liability coverage is really necessary.

Does My BOP Cover Cyber Liability?

To get technical, it depends. Some insurance companies are starting to include more cyber liability coverage in their policies to keep up with the demands of the modern business world. That being said, your standard business owners policy (BOP) typically doesn’t provide nearly enough coverage, so adding a cyber liability policy would still be necessary. Your independent insurance agent can help you find out for sure if you need additional coverage.

Why Is Cyber Liability Insurance So Important?

Virtually all businesses today rely on computers and the Internet for at least some routine tasks, which means they’re exposed to digital risks on a daily basis. Losses and liabilities stemming from data breaches and other cyberattacks can be devastating and expensive, but having the right insurance can greatly reduce their impact on your business. Be proactive and get your business set up with all the coverage it needs in advance, rather than having to learn the hard way.

What Does Cyber Liability Insurance Cover?

Cyber liability insurance covers data and other sensitive information stored electronically, as well as monetary transactions and other common tasks performed by computers and/or online. Cyber liability policies aren’t standard, so their coverages can vary from insurance company to insurance company, but a handful of core coverages are offered by many of these packages.

Most cyber liability policies cover the following:

  • Legal expenses: Including lawsuits (i.e., including attorney, court, and settlement fees) that arise 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 the hiring of professional help when necessary to repair damage to computer systems or security after a data breach or other attack.
  • Loss of income: Covers a potential loss in profits due to suspended or limited operations caused by a data breach or other cyberattack.
  • 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.

Cyber liability insurance is usually very flexible, so team up with your independent insurance agent to assemble a policy that includes all the coverage necessary to fully protect your individual business.

What Doesn't Cyber Liability Insurance Cover?

Cyber liability insurance protects business owners from a lot of threats, but it doesn’t cover just anything. While exclusions vary by policy, there are a few that are pretty standard across the board, such as:

  • Intentional malicious acts
  • Employee/business dishonesty
  • Regulatory/statutory penalties

Both the coverage and exclusions in cyber liability insurance will be unique to the policy that you create together with your independent insurance agent. Your agent can help answer any questions or concerns you have about non-covered perils under your cyber liability insurance.

Which Businesses Should Have Cyber Liability Coverage?

Well, in today’s world, pretty much all of them. Seriously, if your business has even one computer, it’s important to get all the protection you need before you ever plug in any private or sensitive information. Even if your business isn’t targeted by professional hackers, one of your own employees could pose a serious risk by stealing data, installing malware, or something equally harmful. Don’t skimp on cyber liability coverage for your business, it’s just not worth it.

How Else Can I Make My Business Cyber Safe?

To fully protect your business against cyberattacks and more, you need to be proactive in additional ways beyond just getting the right coverage. Start following these recommended tips ASAP to give your business the best possible chance at staying safe.

Do these today to start protecting your business against cybercrime:

  • Use spam filters: No one likes having to delete tons of junk e-mails, but spam filters do much more than just sparing you from this boring task. Good spam filters significantly cut down your chances of accidentally opening phishing emails. Phishing emails appear to be sent from a legit company, but really come from cybercriminals requesting sensitive data like personal logins or billing information.
  • Use strong passwords: Though it’s tempting to use simple passwords that are easier to remember (like your favorite soda, for example), you can seriously reduce your risk of cyberattacks by choosing stronger passwords. The longer, the better. Try for a password that’s at least 10 characters long and contains a combo of uppercase and lowercase letters, numbers, and special characters.
  • Update your software regularly: While the seemingly constant notifications to update your software may be annoying, they’re really trying to protect you. The longer a software update has been out, the longer hackers have had to figure out a way to infiltrate the system’s defenses. Software updates contain patches to fix any discovered holes in security, so it’s important to stay current.

Taking precautionary measures to prevent cybercrime will not only protect your business, but also allow you as the owner to have better peace of mind, so you can focus on other important tasks.

What Else Does My BOP Cover?

BOPs are basically a package of coverages needed by all business owners that are finished off with protections needed by your unique business. The basic coverages provided by BOPs protect many important areas of businesses across the map.

Standard coverages in a BOP include:

  • Commercial general liability: Covers your business against property damage or bodily injury claims made by a third party.
  • Business income: Covers the financial loss suffered while a business is closed due to fire damage or other disasters.
  • Property damage: Covers loss of/damage to your physical property, including your office/storefront and inventory, from hazards like fires, storms, vandalism, etc.

Your independent insurance agent will help you assemble a BOP that covers all aspects of your unique business.

What Other Coverages Should I Consider Adding for My Business?

Aside from digital threats and other obvious risks, there are still more hazards business owners face that need their own protection. Fortunately many common add-on coverages solve the vast majority of frequent business claims.

Common add-on coverages to BOPs include:

  • Professional liability:  AKA "errors and omissions insurance," coverage protects against claims made by clients who suffer financial losses from a job that you somehow botched.
  • Boiler & machinery: AKA "equipment insurance," coverage applies to electric equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc.
  • Crime insurance: Covers losses due to criminal activity such as theft or fraud. Coverage also applies to employees who steal from the company.

Together with your independent insurance agent, the two of you will be able to brainstorm every area in which your business may need additional protection.

Here’s How an Independent Insurance Agent Would Help

When it comes to protecting your business against cybercrime, data breaches, and all 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 BOP 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.

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TrustedChoice.com Article | Reviewed by Paul Martin

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