Cyber Insurance for Businesses

In today’s digital world, an ever-growing, faceless threat is faced by businesses. Consequently, it has become quite commonplace to hear of a business falling victim to a cyber-attack. Therefore, today, we explore the most common types of attacks, best practices to prevent an attack, and how cyber insurance protects your business in the event an attack does cause harm. Moreover, cyber insurance for businesses doesn’t need to be bulky or confusing. Hopefully, this blog helps!

Cyber Insurance Needs Are Rising

Cybersecurity firms and digital communication companies like Verizon, Symantec, IBM, and the National Cyber Security Alliance all state that 43% of all attacks are perpetrated against SMBs. In addition, 61% of SMBs have experienced a cyber-related attack in the past 12 months. (Embroker) (Cybersecurity Magazine)

Five Most Common Cyber Attacks

  • Ransomware: accounting for as much as 80% of all attacks, this locks down the victim’s files, rendering business impossible to continue until a ransom is paid to the attacker. This is the most common type of cyber insurance claim over the last five years.
  • Business Email Compromise: this applies to specific to accounts that are likely to perform wire transfers. Specifically, this gains access to a company’s email accounts by tricking employees into transferring funds to fraudulent accounts
  • Social Engineering: the manipulation of individuals to get them to divulge confidential information
  • Malware: software is downloaded containing viruses, worms, trojans, and spyware.
  • Phishing: fraudulent attempts to obtain sensitive business or personal information

Costly Result of a Cyber Attack

Successful cyber attacks do far more than cost a business money. They can wreak havoc financially, physically, and reputationally. A business is harmed if their productivity is halted or if delivery of goods or services is stopped. Financially, a business faces immediate IT costs, legal fees, customer notifications, and potential regulatory fines depending on the nature of the attack. And a business’ reputation will be eroded, and trust and loyalty lost. Especially if the business relies heavily on word-of-mouth, this can be particularly harmful.

Cyber Attacks Often Cost Millions

  • Ransomware: Organizations that have paid a ransom in 2024 have reported an average payment of $2 million, up from $400,000 in 2023.
  • Business Email Compromise: This costs around $130,000 per attack and has risen more than 1,000% in the past decade.
  • Phishing: For an SMB, this is around $1.6 million
  • Data Breach: IBM reports in their 2023 Cost of Data Breach Report that the average cost globally is $4.45 million.
  • Malware: on average, these can a business $2.6 million per case. This, based on a 2023 Accenture report.

Cyber Insurance Considerations

Who Needs Cyber Insurance?

  • Do you use email for business communications?
  • Do you accept electronic payments?
  • Do employees have access to company information?
  • Do employees use a mobile phone for work purposes?
  • Does your business store vital information on computers/laptops/tablets that are connected to the internet?
  • To employees travel frequently for work, occasionally using public WiFi for work?

If you answered YES to any of the above items, then a Cyber Insurance Policy is right for you. Even if you answered NO to all items, a cyber policy is still a wise choice. As the old adage goes, it is better to be safe than sorry!

There are Two Main Cyber Policies

1. First-Party Coverage:

  • Coverage Scope: Protects the insured business directly.
  • Components:
    • Data Breach Response: Covers costs related to investigating and managing a data breach.
    • Business Interruption: Compensates for lost income and additional expenses due to a cyber incident.
    • Cyber Extortion: Covers expenses associated with cyber extortion and ransom payments.

2. Third-Party Coverage:

  • Coverage Scope: Protects against liabilities arising from a cyber incident.
  • Components:
    • Privacy and Network Security Liability: Covers legal costs and damages resulting from a data breach.
    • Media Liability: Addresses liabilities related to online content and media.

Additional Cyber Policies

  1. Security and Privacy Liability
  • Coverage Scope: Focuses on liabilities arising from a security or privacy breach.
  • Components:
    • Legal Expenses: Covers costs related to defending against legal claims.
    • Damages: Pays for settlements or judgments resulting from a covered incident.

2. Technology Errors and Omissions (Tech E&O)

  • Coverage Scope: Addresses liabilities related to technology services and products.
  • Components:
    • Professional Liability: Protects against claims of errors or omissions in technology services.

3. Regulatory Liability

  • Coverage Scope: Addresses costs associated with regulatory investigations and penalties.
  • Components:
    Fines and Penalties: Covers regulatory fines resulting from a covered incident.

Cyber threats are not just probable but inevitable. Therefore, safeguarding your business with a strong cyber policy should be a must-have. However, many businesses still see it as an optional policy to consider in the future. Understanding the different types of attacks and how each can harm your business will help highlight the importance of constant vigilance and proactive protection.

Reliable Agency, Inc. has local offices right here in Hermantown, MN, Cloquet, MN, and Superior, WI. Contact us today so we can begin providing you with the peace of mind every business owner deserves. Cyber insurance for businesses like yours is more important now than ever.

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