Why Buy Cyber Liability Insurance
Cyber liability insurance is essential for businesses of all sizes because cyber threats are becoming more frequent and sophisticated. Cyber-attacks and data breaches will happen. Here are key reasons to consider purchasing cyber liability insurance:
- Financial Protection Against Cyber Attacks
A cyberattack can be costly. Cyber liability insurance mitigates expenses from data breaches, including investigation by cybersecurity experts, customer notifications, legal fees, and settlements. The average cost of a breach (millions) far exceeds insurance premiums, making it a cost-effective safeguard. Look for cyber liability insurance policies that help cover expenses related to:
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- Data breaches (including notification costs)
- Ransomware attacks
- Business interruption losses
- Forensic investigations
- Legal fees and regulatory fines
- Compliance with Regulations
Federal and state regulations require companies to follow data protection laws (e.g., HIPAA, GDPR, CCPA). Cyber liability insurance helps ensure compliance and covers costs related to regulatory penalties.
- Reputation Management
A cyber incident can damage your business’s reputation. Cyber insurance often includes coverage for public relations efforts to help restore trust with customers.
- Third-Party Liability Claims
Comprised customer or other third party data could cause lawsuits against your firm. Cyber liability insurance helps cover legal defense costs and settlements.
- Business Interruption Coverage
A typical business owners policy (BOP) does not cover a business interruption event due to a cyber-attack, data breach, or ransomware attack. Look for policies covering business interruption expenses, helping you recover lost income if a cyber event disrupts operations. One law firm, hit by a ransomware attack, took over 3 months to recover their systems. The firm had loss billings of over $700,000. The firm did not have a properly endorsed cyber policy to cover the loss.
- Vendor and Contract Requirements
Business contracts may require proof of cyber liability insurance, especially for companies handling sensitive data. Contracts requiring cyber coverage are typical for firms providing services in the healthcare industry.
- Expert Support
Legal professionals to help address regulatory/legal requirements on a data breach. Forensic information technology experts to help plug the holes in the dike and assist in getting the firm operational. Public relations specialists to mitigate damage to firm’s reputation.
- Ransomware Mitigation
Covers ransom payments (though controversial) and negotiation services, providing a lifeline in critical situations.
- Peace of Mind
With cyber threats evolving daily, having insurance allows you to focus on running your business without constant worry about potential cyber risks.
Finally poor cyber hygiene could trigger policy exclusions. Pay attention to employee training, keeping software up-to-date, and maintaining antivirus/firewall programs. An ounce of prevention could help mitigate the damage later.
Like help reviewing your coverage or getting a cyber quote?
Contact Me Today
Lee Norcross, MBA, CPCU
California License # 0D87292
L Squared Insurance Agency, LLC ® DBA in California as L2 L Squared Insurance Agency, License # 0L93416
Managing Director, CEO
Lee@L2Ins.com
616-726-7080
