Why does my business need cyber insurance? : GKM Inc – Blog

Why does my business need cyber insurance?

Posted by:   |  Aug 22, 2018  | Post comments

The prevailing thought among data security experts is that no matter the size or scale of a business, a data breach is inevitable. In fact, there is a good chance of the data being compromised already and the owner is unaware of it.

A scary thought for sure, but it does not make it any less true. And as the world becomes more connected and data thieves become more adept, the need for data security will only increase. While it is easy to feel helpless / having no control over over this situation, there is a relatively painless step one can take to increase digital protection: purchasing cyber liability insurance.

Cyber liability insurance covers the first and third-party risks associated with doing business online. It covers privacy issues, internet-related instances of intellectual property infringement, viruses or any other issue that may be passed along via internet connections.

In truth, anyone that hosts a website that interacts with the public at large is a candidate for cyber liability insurance. This includes commercial businesses and website publishers.

Cyber liability insurance actually covers quite a bit. Similar to other types of business liability insurance, it can cover lost sales due to business interruption and the cost to notify customers of a breach. This is especially important for small businesses. If there is only one line of business, and that business is shut down due to a data breach, then that breach can potentially shut down the business. With cyber liability insurance, there will be cash at hand to keep the business running until normal operations can resume.

In general, without cyber liability coverage, the business and its owner are solely responsible for any data breaches and information leaks, including loss of business, communication with customers, an investigation, lost information retrieval or crisis management. Additionally, if any of the customers decide to sue for jeopardizing their data, the business owner would be responsible for all of the court fees and settlements.

If the business requests for information and then stores the information with a third party or in the cloud, it is still legally responsible for its safe-keeping. While it is in the third party’s best interest to protect that data, no data management system has proven impenetrable to security breaches, so no system is infallible. Having cyber liability insurance will at least provide a layer of protection.

While Fortune 500 companies might have IT departments specifically dedicated to risk assessment, most small businesses cannot afford that. Cyber liability insurance providers can and often do provide a risk assessment function, whereby they review the policies and procedures and work with the business owner to reduce risk.

In today’s interconnected world, it is almost impossible to conduct business without using the internet. As a result, the risk associated with data storage and intellectual property has increased and continues to do so. Taking a close look at the company’s online footprint to determine if cyber liability insurance is right is the first step.