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Do you need cyber liability insurance?
If your business stores critical data of any kind online, then you can benefit from cyber liability insurance. Hackers may see small businesses as appealing targets because their cybersecurity resources and awareness are less than larger businesses. Small businesses will often have to face the brunt of cybersecurity attacks without access to much-needed resources.
Companies that store sensitive information like personally identifiable information (PII), personal health information (PHI), or banking information should carry a cyber liability insurance policy. Many industries that utilize personal or financial data like healthcare, education, and banking are required by law to take steps to secure data in case of a breach. A cyber liability insurance policy can cover expenses in case of a breach.
Are there different types of cyber liability insurance? Can it be customized?
Cyber liability insurance can vary between each carrier, which means there is no standard cyber liability insurance policy. Even though there are many unique components, most cyber liability insurance carriers offer two types of coverage - first-party coverage and third-party coverage.
First-party coverage helps pay for cybersecurity incident expenses that directly affect your business. It can cover hiring consultants, notifying customers, fraud monitoring, lost income, and security updates. Some carriers will let you add first-party coverage to your general liability insurance policy.
Third-party coverage helps cover claims made against your business by third parties affected by the network exposure, data breach, or other similar events. It can cover the cost of legal defense, awarded settlements, and other court costs. Some carriers will let you add third-party coverage to your professional liability insurance policy.
What does cyber liability insurance cover?
The most common cyber liability coverages pay for certain financial losses due to a cyberattack, ransomware, data breach, and other digital-related risks. A cyber insurance policy can provide coverage for costs associated with federal or state regulations, notices to affected parties, security flaw investigation, hiring of expert consultants, credit monitoring, loss of business, lawsuits, regulatory fines, and sometimes extorsion payments.
Every state has unique legal requirements regarding the steps a business needs to take after a cybersecurity attack. Cyber liability insurance helps cover the cost of legal guidance to follow these guidelines. For example, Vermont has instituted the “Security Breach Notice Act,” which requires all data-gathering businesses to notify the state’s Attorney General within 14-days and affected customers within 45-days when a security breach has happened.
For businesses gathering data on clients in multiple states, this becomes a tricky legal path to navigate as each state has different regulations in place. A cyber liability insurance policy may help cover compliance costs.
If state or federal regulations were not met in some capacity, a business may be able to recoup some of those fines through their cyber liability insurance policy.
Notices to affected parties
Depending on the affected party’s location, many businesses will be required to send out direct notices to all those directly affected by a cyberattack. Directly notifying all your customers can become costly, but failure to do so can produce large fines from government regulators. Cyber liability insurance can help cover the cost of sending these notifications or fines associated with lack of notification.
In some scenarios when social security numbers, credit cards, or banking information is stolen, a company can be required to set up multi-year-long credit monitoring for affected customers. A cyber liability insurance policy covers the cost of setting this up and other ongoing maintenance of the initiative.
Security flaw investigation
Cyber liability insurance covers the cost of identifying how a security breach happened in the first place. It can cover the need to hire a team of experts to investigate and the required security changes to prevent the issue from happening again.
Loss of income
If your business is shut down due to a cybersecurity issue, cyber liability insurance will pay for lost income while you were unable to operate. This can occur due to incidents involving ransomware that steal important data and holds it for ransom or malware that causes network outages over long periods of time.
Lawsuits from people affected by stolen data can quickly become expensive. A cyber liability insurance policy will pay for attorney fees, court costs, and potential settlements or judgments.
Depending on the cyber liability insurance policy details, it may cover extorsion payments when critical data is being withheld by the attackers for a ransom payout.
What does cyber liability insurance NOT cover?
Cyber liability insurance only covers costs associated with data breaches, cyberattacks, and hacks. It will not cover business oversights, professional liability, or general liability insurance claims.
Cyber liability insurance will not cover any expenses related to claims of inadequate work delivered or performed for a client. These claims fall under professional liability insurance. However, we have access to carriers who provide insurance coverage that bundles this coverage with cyber liability.
Third-party property damage or injury
A business will require a general liability insurance policy to cover property damage or injuries to customers.
Business owned property damage
Commercial property insurance will help your company cover damage to owned assets.
How much does cyber liability insurance cost?
There are several factors that will impact the cost of a cyber liability insurance policy which make it difficult to pin down an exact cost without knowing your business’s exact requirements. Some points that affect a cyber liability insurance policy premium are:
Type of sensitive data in storage
There are some types of data that are more expensive to insure. Sensitive information like medical records and financial information typically require higher policy premiums. Certain industries that store these types of data are often faced with strict compliance regulations that dictate steps taken after sensitive data is stolen.
How many customers, clients, or patients are in your database? The larger the database, the larger the risk in the case of a data breach. This is usually taken into consideration along with the type of data that is being stored. In general, a smaller database will have lower monthly rates in comparison to a larger database with similar attributes.
Larger businesses that are generating more revenue will often require increased policy limits to ensure sizable potential damages are covered within their cyber liability insurance policy.
History of cyber liability insurance claims could increase monthly premiums. This often depends on actions the company takes to secure data after being the target of an attack.
Coverage limits & policy type
The more digital assets your business has, the more likely you will need larger coverage limits with your policy. The type of coverage – first-party, third-party, or both – can make a difference in monthly rates as well.
How do I make a general liability insurance claim?
Most carriers have online claim reporting capabilities, or you can call their toll-free claims reporting phone number. At Winooski Insurance Agency, we are always available to assist you through the claim reporting process. Our clients can rest easy knowing our experienced agents are ready to help when needed.
View a list of our partner carriers and instructions on where to file a claim with each.
Why should I get general liability insurance through an independent agency?
Winooski Insurance has been an independent insurance agency for almost 40-years. During this time, we have created long-term relationships with a multitude of insurance partners which allows us to present you with a broad range of coverage options at competitive rates. We’re committed to helping you address your unique requirements.
“ The level of service and professionalism I’ve received from Jeff and the experienced professionals at Winooski Insurance is unparalleled. I’m grateful to have been referred to Winooski Insurance and truly feel like I have a business partner, not just an insurance company. ”
Cherian Philip, CFO
“ The entire team at Winooski Insurance have done an outstanding job of providing insurance coverage for my company. This is not always easy, as each project has to be reviewed by Winooski Insurance to verify that we have the required coverages. ”
David Bogue, President
Professional Construction Inc.
“ I have personally and professionally used Winooski Insurance for over 15 years. The staff is efficient, the service is excellent, and they work hard to keep the premiums low. I highly recommend Winooski Insurance! ”
Mark Chaffee, Senior Loan Officer
Draper and Kramer Mortgage Corp.