Is Cyber Liability Insurance Right for You?
The Digital Age
As any savvy business owner knows, purchasing general and professional liability insurance is simply smart. But in today’s hyper-connected digital world, in which phishing emails, misplaced laptops, or weak passwords can result in a massive data breach, it’s clear the rules are changing.
Even though the number of annual data breaches is on the rise, the need to combat cyber thieves is hardly new. In 2014, Sony Entertainment suffered a major data breach exposing personal emails, internal communications, and 47,000 employee social security numbers.1 And how can anyone forget the 2017 Equifax hack in which 147.9 million U.S. consumers' full names, Social Security numbers, birth dates, addresses, and driver license numbers were stolen.2
Despite these high profile hacks, many small and medium-sized business (SMB) owners remain unprotected in the event of a network intrusion. In fact, as of 2018, 60% of SMBs failed to purchase Cyber Liability insurance even though cyber incidents have been identified as the second largest threat to businesses only behind supply chain interruptions.3
Recovering From an Intrusion
Even though Cyber Liability insurance won’t stop data thieves from trying to penetrate digital security protocols, there are plenty of reasons SMBs might want to invest in cyber liability:
- Cost: Data breaches can constitute an average consolidated cost of over 4 million dollars.4
- Frequency: Breaches happen all the time. Nearly 2 thirds of surveyed SMBs have been the victim of data theft in the last year.5
- Efficacy: Of those same surveyed SMBs, 90% stated that their Cyber Liability policy covered all aspects of the suffered theft.
- Risk management: Preparing for every possibility is just smart. Cyber Liability insurance is one more way to keep your business safe.
It's About More Than Money
Businesses that purchase Cyber Liability insurance do so because they understand the long-term financial and reputational costs associated with a data breach or hack. A loss of consumer confidence can have an acute, lasting impact that many small businesses often can’t overcome. At the end of the day, even though our world is more connected than ever, a small businesses’ digital reputation is a driving factor in consumer loyalty.6
1. C-SPAN, 2018
2. NBC, 2018
3. Statista, 2018
4. Ponemon Institute, 2018
5. Argo Group, 2018
6. Edelman Trust Barometer, 2018