Between 2014 and 2018, 1.4 million Alabama residents’ personal information was accessed through at least five data breaches that occurred at state government offices. Many more were impacted because of cybercriminals hacking businesses throughout the state.
Data breaches present a costly hazard to consumers and businesses alike. If your company stores important customer information electronically, it is at risk. Cyber liability insurance can help to ease the financial ramifications if your company is targeted by hackers. Talk to a local independent insurance agent to learn more.
What Is Cyber Liability Insurance and Why Is It Important?
Cases of computer hacking and cybercrimes are increasing every year and this puts businesses that use computers that are connected to the internet at risk.
To make matters worse, the costs associated with these attacks are also on the rise. The 2019 Hiscox Cyber Readiness Report states that the average cost per incident in the US is approximately $119,000. Most small businesses cannot recover from a financial loss of that size.
Cyber liability insurance is a relatively new insurance product that was designed to protect businesses from losses related to cyberattacks.
How Much Does Cyber Liability Insurance Cost in Alabama?
There are several factors that can influence how much a cyber liability insurance policy will cost your company. These include the following.
- The industry in which your business operates
- The size of your company and its annual revenues
- The amount of third-party data you store and its level of sensitivity
- The strength of the cyber security measures put in place by your company
- The amount of coverage you are purchasing
- The size of your deductible
On average, a $1 million cyber liability insurance policy with a $10,000 deductible costs about $1,500 a year. Of course, small businesses with low risks will pay much less than this.
A local independent agent can shop around for coverage to ensure that you are getting your policy at a good price.
Who in Alabama Needs Cyber Liability Insurance?
When you think of the types of businesses that might need cyber liability insurance, you probably think of law firms, financial institutions, medical offices, and technology companies since these types of businesses maintain a great deal of sensitive client data.
However, nearly all businesses today can benefit from the protection offered by cyber liability insurance. It is hard to find a company that does not manage customer and/or partner data such as credit card numbers, personal details, and confidential information in computer systems. If this data is accessed, the company, no matter its size, can face large financial losses.
While you may think that cybercriminals only attack large companies, according to the IT Security Firm Solvere One, cyberattacks on small businesses are on the rise and are expected to cost these small companies more than $5 trillion in losses over the next five years.
No matter how small your business, if you have sensitive data in your care, you can benefit from protecting your company with a cyber liability insurance policy.
Examples of Cyber Liability Insurance Claims in Alabama
There are a few different ways that cybercrimes and data breaches can occur. A good cyber liability insurance policy can cover against each of them. Here are some examples of crimes for which you may file a cyber liability insurance claim:
- Hacking: Sophisticated cybercriminals are very good at engineering ways to break through firewalls and other security features that you may have protecting your data. It is therefore important that you keep your security systems fully updated at all times.
- Phishing: Phishing refers to using social engineering tactics to trick people into providing sensitive data that can enable a third party to access passwords and secured computer files.
- Malware attacks: There are many types of malware that your company may be vulnerable to. Some types install keyloggers or other spyware through malicious links or downloads that your employees may inadvertently enable. Others may hijack your system entirely and refuse to renew access to your system until a ransom has been paid.
- Human error: Sometimes human error by your company employees can result in data being accessed by the wrong people. For instance, in 2016 a woman accessing the website for the Retirement Systems of Alabama noticed that she could see the personal health information of several other people. This was due to an employee error during a routine maintenance update.
Every business that uses computers is at risk for each of these types of attacks or data breaches. Be sure that you have a good cyber liability insurance policy in place to help your company deal with the aftermath if your customers are affected.
What Does Cyber Liability Insurance Cover?
There may be some variations in what different policies will cover, but for the most part, you can expect your cyber liability policy to cover costs associated with the following.
- Notifying affected individuals about the breach
- Supplying credit monitoring and identity restoration services to affected individuals
- Fines and/or penalties imposed through lawsuits related to the breach
- Fees for legal representation and defense
- Fees for public relations expertise to help restore your company’s reputation
- Running IT forensics to identify the source of the attack
- Restoring lost or damaged data
- Negotiating and paying ransomware demands
- Network business interruption if your computer system is rendered unusable for a substantial amount of time
- Errors and omissions coverage if you are unable to fulfill contractual obligations due to the data breach
The coverage provided by cyber liability insurance is far-reaching. A local independent agent can help you find a comprehensive policy and can ensure that you are aware of the many facets of coverage it provides.
What Does Cyber Liability Insurance Not Cover?
As with any insurance policy, cyber liability insurance does have its limitations. For instance, most policies will not cover the following.
- Loss of potential future profits
- Loss of value to your intellectual property
- The cost of improving or upgrading your technology systems and cyber security software.
Additionally, your coverage will extend only as far as your policy’s coverage limits. It is important to be aware that most business umbrella insurance policies do not cover excess liability costs related to cyber liability claims, so you will want to be sure you buy enough coverage to suitably protect your company.
How to Find the Best Cyber Liability Insurance Coverage in Alabama
When you are looking for the best cyber liability insurance policy to cover your Alabama business, look no further than a local independent insurance agent. These agents are free to shop around to help you find a reliable policy that provides the coverage you need at a highly competitive rate.
Don’t leave your businesses vulnerable to losses caused by a cyberattack. Set up a one-on-one consultation with an insurance agent near you to learn more about this important coverage.
TrustedChoice.com Article | Reviewed by Jeffrey Green
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