Cyber Liability Insurance for Small Business

Here’s a brief example of how cyber liability insurance works

How does cyber insurance for small business needs work? Let’s look at a brief example. For many SMBs, this is an all-too-real scenario many have already lived through.

On Monday morning, one of your employees receives an email. At first glance, it looks like it’s from you, the business owner. The email address and name are correct. The message even sounds like how you might phrase things.

In the email, the employee is told that you’ve forgotten the password for one of the business accounts. Could the employee please send it?

Thinking nothing of it, the employee types the password in a reply and hits send.

However, instead of the reply going to your email account, it goes elsewhere. That’s because you never wrote the email. It was a cyberattack – a phishing email – designed to instill trust by making an employee think they were communicating with someone in a position of authority.

With that password in hand, the hacker now has access to a veritable treasure trove of data that could include:

Proprietary business information
Customer personal and financial information
Business financial information

With little trouble, they could then harvest that information, steal the identities of your customers, apply for credit cards, take out loans in their names, and more.

And your business is responsible for all of it. Could it weather such a storm? Probably not. That’s why cyber liability insurance exists.

By the numbers: eye-opening statistics illustrate the immense need for cyber insurance

43%

of cyber attacks are targeting small businesses. It’s not only the big businesses that suffer from them. Small businesses can be more lax about security and easier to penetrate.

60%

of SMBs hit with a cyber-attack will close their doors permanently within just six months.

424%

increase in cyber breaches for small businesses in 2022.

While training your employees and installing modern IT safeguards are vital steps, you must protect your business. Cyber liability insurance is the only way to do that.

How does cyber insurance work?

Cyber liability insurance works much like any other type of insurance. When a covered peril occurs (a breach or attack), you report the incident to your insurance company. The insurance company then goes to work to limit your liability, protect your assets, and mitigate the fallout of the breach or attack.

The first step in obtaining cyber insurance coverage is to contact several agencies so you can compare quotes. You’ll need to provide specific information about your business, including:

Your industry
Your business name
The length of time you’ve been in business
Your annual revenue
Information about your current IT setup, including any safeguards in place

With this information, the agency will provide you with a quote for cyber liability insurance. At Kickstand Insurance, we understand the immense risks today’s small business owners face. We can help you defend what you’ve built with a customized cyber insurance policy that offers both ironclad protection and affordability.

Get your free, no-obligation quote now.

Do I need cyber insurance?

While hackers increasingly target small and medium businesses, some companies are at greater risk than others. In most cases, businesses with the highest risk profiles are those that:

Handle consumer medical/health information/records
Store or process credit card or banking information
Store or process driver’s license numbers
Store or process Social Security numbers
Store or process consumer personal information, including phone numbers, street addresses, names, and email addresses

Does your business fall into any of those categories?

If so, you need the protection that only cyber liability insurance can provide. Our quick online form takes just 5 minutes to complete, and you’ll receive an instant, no-obligation quote. Find out how simple it is to obtain peace of mind about your cyber protection!

What does cyber insurance cover?

A data breach or cyber-attack can have wide-ranging implications. It could mean trying to recover sensitive information. It could also mean paying for legal representation in court. Cyber liability insurance will cover most of these.

To make an informed decision about the insurance you purchase, understand that there are two types of cyber insurance coverage today. One is for those who directly handle sensitive data and is called first-party coverage. The other is for cybersecurity companies and is called third-party coverage.

First-party coverage: What you need to know

For most SMBs, first-party coverage is required. This type of cyber liability insurance covers the costs related to a breach or attack that affects your business and/or customers directly. Some of the most common things it covers include:

The cost of response

If you experience a data breach, state law usually requires that you respond. This can be costly and time-consuming. It also may involve several different steps, such as hiring an outside firm to investigate the breach.

Your response will involve notifying customers who have been impacted, which requires identifying those individuals in the first place. While it may not be required, you may also want to arrange and pay for credit and fraud monitoring services for all those affected. This can help to restore some trust in your brand.

Finally, you will have to pay compliance fines related to credit/debit card processing (PCI regulations).

Business interruption expenses

If your business is interrupted by a data breach, it means lost revenue as things grind to a halt.

Cyber liability insurance can offset the cost of hiring additional staff, investing in additional IT infrastructure, hiring professional firms to assist (such as a PR firm or a crisis management specialist), and more.

Other expenses that fall into this category can include training/betterment services and loan payments to name just two.

Third-party coverage: What business owners should know

If you own and operate a cybersecurity company and one or more of your clients experiences a data breach or cyber-attack, you can expect some fallout. Third-party coverage helps limit your liability and mitigates the risks you face here if a client sues you.

Settlement amounts

One area where cyber liability insurance is crucially important is in helping you pay settlements out of court.

Judgments

If a court rules in your client’s favor and orders a judgment against your firm, cyber insurance will help you meet that expense.

Legal defense

Regardless of the outcome of the situation, you will face mounting legal costs. These can be incredibly expensive. Cyber insurance helps you cover those costs.

What does cyber liability insurance not cover?

While cyber insurance covers a wide range of things you must deal with in the event of a data breach or cyber-attack, there are some things your policy just won’t cover.

Loss of value

If a data breach or cyber-attack results in a loss of value due to theft of your business’s intellectual property, don’t expect your cyber liability insurance to cover it. This type of insurance is primarily designed to limit your company’s risk in the present and doesn’t really deal with potential value projected in the future.

Potential future lost profits

Most cyber insurance policies do not cover potential future lost profits.

Unrelated data loss

Your cyber liability insurance policy will not cover data loss due to accidental damage, or natural occurrences (fires, power outages, etc.).

Mistakes/Oversights

If you’re facing fallout over a mistake or oversight, then you’ll need professional liability insurance.

Other things that may not be covered by your specific policy include the following:

Property damage
Bodily injury/worker injuries
Hardware/software
Business reputation damage

It’s important to understand that some of these are covered under certain policies but are excluded under others. It’s critically important to compare your coverage to your needs and work with an expert to fine-tune your coverage to match your risk profile.

At Kickstand Insurance, our team of experts has deep expertise in working with clients to mitigate their cyber-attack and data breach risks. We can help ensure that you have the right coverage to match your requirements.

Get a free, no-obligation quote now.

How much cyber insurance do I need?

Every business’s cyber liability insurance needs differ based on a very wide range of factors. Some of those that have the greatest impact on your policy coverage limits include the following:

Your industry
Your business size
Your annual revenue
Amount of data handled

Interested in taking the next step to protect your business in the event of a data breach or cyber-attack? Use our easy online form!

It takes just 5 minutes, and we’ll give you an instant quote. One of our insurance experts will also contact you to discuss your needs and business specifics to help fine-tune your coverage to maximize protection and minimize costs.

Don’t take chances when it comes to cyber liability!

Get your free quote now

FAQs

Does cyber insurance cover ransomware?

It depends. Many policies do, but many do not. There is no such thing as a standard policy when it comes to cyber liability insurance. Most agents are happy to offer customizable add-ons to help you dial in your coverage to meet specific risk factors, including ransomware and ransom-based attacks.
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How at-risk is my small business for a cyber-attack?

No business can consider itself “safe” from cyber-attacks or data breaches today. More and more, attackers are targeting SMBs because they are easier to penetrate than most enterprise-level organizations.

Additionally, attackers are more interested in the data your business stores than in its financial reserves, so any business that stores credit card information, banking information, or consumers’ personal identification (names, addresses, email addresses, etc.) is at risk.

Ultimately, every business should be concerned about cyber-attacks and data breaches today. Cyber liability insurance remains one of the only solutions to mitigate this risk.

Can you give me an example of a cyber-attack or a data breach?

Cybercrime is a big business today. Criminals can make a fortune by exploiting a business’s weakness to get access to sensitive personal and financial information.

That data can then be used to steal existing identities, create new financial accounts in peoples’ names, or even create brand new identities using partial credentials from affected customers or clients.

Just some of the ways that these instances affect a business include the following:

Phishing emails and phone calls
Malware and ransomware
Denial of service attacks (DDOS)
Network security penetration
Employee mistakes/negligence

How do cyber-attacks occur?

Cyber-attacks ranging from phishing to ransomware occur in specific situations, including the following:

A business may not have an up-to-date network security solution in place.
A business may not actively monitor and defend its network against incursions.
A business may not have adequate safeguards in place to prevent viruses and malware from being downloaded (malware scanners and antivirus software).
A business may not have invested sufficiently in training its employees on topics ranging from identifying suspicious emails and phone calls to proper password hygiene.

A cyber-attack can happen to any business, though. Even the most advanced antivirus software and continuous employee training programs are not 100% effective deterrents. As a business owner, it is critical that you’re prepared for this eventuality by having cyber liability insurance.

What is Cyber Liability Insurance?