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Cyber liability insurance protects from cybercrimes like ransomware and internal attacks that have risen exponentially in the last five years. Although businesses have to budget hundreds or thousands of dollars extra for this insurance, that cost can look small compared to recovering from a data breach.
Coverage varies widely between insurance companies for protecting against this rising risk. Your cyber liability insurance may include:
Cyber liability insurance could cost your business anywhere from a few hundred to several thousand dollars. A business’s premium stems from its risk of a cybersecurity breach and the expected costs for restoring sensitive information.
Factors that influence your premium:
Cybercrime has risen nearly 70% in the last five years and cost large organizations $13 million for full recovery in 2018, according to the 2019 Cost of Cybercrime Study conducted by Ponemon Institute.
At the same time, cyber liability court claims could cost $110,000 in legal defense fees and $220,000 in settlements, according to the 2018 NetDiligence Cyber Claims Study. The costs go up from there if HIPAA gets involved for a breach of healthcare data. Many businesses couldn’t handle these steep costs on their own.
In 2013, retail giant Target was involved in the biggest retail hack in history when hackers received access to more than 40 million shoppers’ credit card details. The retailer’s case shows the wide impact of a cyber breach:
It’s not just major companies like Target, LinkedIn and Yahoo that should show concern over cyber liability. Claims against smaller companies can be just as devastating. In fact, over 40% of cybercrimes target small businesses, according to the 2019 Verizon Data Breach Investigations Report. Every business should consider the risks of cybercrime and the effects it might have on the company’s operations.
Businesses face many types of cybercrimes with each one increasing in number of attacks each year. Threats to watch out for:
As with any form of insurance, it is critical that business owners take the time to assess what they actually need to be covered for to avoid paying for expensive extras on their policy they don’t require. Some other key steps to reduce the cost of your cover include:
While cyber liability insurance can set your business back a few thousand dollars each year, it also protects against the increasing danger that a cybercrime will happen to your company. Even low claims payouts can total hundreds of thousands, offsetting the cost of insurance completely. Further minimize the impact on your bottom line by comparing multiple commercial insurance companies.
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