Why Small Businesses Need Data Breach Insurance
Data breach insurance is nothing new as it has been on the market for over 10 years. But did you know about it? Not many people do, unfortunately. Cyber Liability Insurance Cover (CLIC) insurance protects your business and clients for when you have a data breach. It is sadly the new normal and you can’t say if you have a data breach, but when you have a data breach. It is better to be prepared though and handle it than to be trying to fix the issue when you are buried and stressed.
In the United States 46 out of 50 states have mandatory data breach notification requirements. Handling a data breach can get costly in the blink of an eye. Just like a business has insurance policies for theft and fire, it will soon be the new normal for them to have data breach insurance.
What exactly does cyber liability insurance cover?
- Network Security Liability: Costs related to data breaches and damages on third-party systems.
- Extortion Liability: Threats of cyber extortion and the fees related to handling the situation.
- Multimedia Liability: Damages sustained from website and intellectual property rights infringement.
- Data Breach and Privacy Crisis Management: Covers all expenses related to the data breach incident including data subject notification, the investigation and remediation, plus the overall management of the breach. Also included are the regulatory fines, legal costs including court attendance and litigation.
Let’s talk about that last bullet point for a moment. A cyber breach was relatively unheard of until the 2000s. Before then these types of policies were to cover the losses for when a computer system went down. Those were the good ‘ol days. Then Fortune 500 companies needed an insurance policy for when their information was hacked. Fast forward to today when small businesses need the same type of insurance as a hacker typically has no boundaries on who they hack. Did you know the way hackers were able to take down Target was from a small refrigeration company that they used? Yep, find the weakest link and attack via that data point.
In 2013 only 16% of small- to mid-sized companies had cyber liability insurance in place. Today that has doubled to 33%. Unless you want your company to be on the hook for potential millions of dollars, make sure you have a data breach insurance policy in place.