5 Reasons a Business and Employees Can Benefit From Cyber Insurance
Computer crimes and cyber breaches occur on a daily basis and affect individuals and corporations alike. In 2018, American companies like Facebook and Uber were hacked. For these two companies, the breach compromised the personal information for over 100 million people. Even the United States government has been hacked. Even with theft prevention software and procedures, breaches happen.
The good news is that there is a promising solution for both individuals and small businesses. For a low rate, individuals and businesses are purchasing cyber security insurance for protection. Read on for 5 reasons why you should consider this new category of coverage in the digital age.
1. Financial Protection
The number one benefit of cyber crime insurance is financial protection. A cyber theft or security breach can be costly. Exposure to customer records increases the likelihood of a class action lawsuit.
The average breach costs a business approximately $4 million. Not many small businesses can absorb a massive hit like this. Cyber insurance safeguards your company’s finances from the long-term impact of a breach.
Individual employees can also be affected by the financial fallout of a cyber attack. In 2018, the first insurance policy designed for wealthy individuals was launched. The policy covers extortion threats, removes malicious software like ransomware and reinstalls safe programs.
In 2019, an employee was not only fired but sued by her employer for falling for a phishing email scam. The company lost $250,000 in the scam. In her defense, the receptionist at the law firm claimed she did not receive training on avoiding phishing email scams.
2. Peace of Mind
Without protection in place, business managers tend to get distracted by cyber security threats. Instead of focusing on growing the business, they worry about potential breaches.
The statistics are undoubtedly alarming for small businesses. One in five small businesses has experienced a cyber attack on their computer network. Furthermore, over 40 percent of security breaches target companies with less than 250 employees.
Cyber security is clearly the number one risk to global business. The good news is that with insurance in place you can rest easy and focus on business growth instead.
3. Legal Coverage
One reason that cyber security breaches are so costly is the legal fees and damage to a business reputation. Often, there are many lawsuits filed when your customers’ personal information is exposed.
Customers aren’t the only target affected by a breach. In 2016, an employee of a North Carolina company fell victim to an email scam and ultimately disclosed the W2 records of 200 employees. Although the company notified all employees and agreed to pay for 2 years of identity theft protection, employees filed a class action lawsuit seeking additional damages.
These legal cases are lengthy and require extensive representation. Your legal expenses are sure to be substantial with a lawyer charging by the hour. Fortunately for you, cyber insurance provides coverage for victims of cyber theft.
4. Helps Customers
Cyber insurance would not effectively protect your business if it ignored affected customers. Your clientele places trust in your business to protect their data. If you don’t make things right with your customers, they are likely to shop elsewhere. The damage to a company’s reputation following a cyber attack is often the most expensive component to a claim.
First, you need to notify all affected customers of the breach. In some cases, data theft may lead to more nefarious crimes such as identity theft. If this occurs, your business is responsible for restoring customers’ identities.
Both notification and identity restoration are expensive endeavors. A public relations company is often necessary to monitor social and support channels and change the story. Cyber insurance helps to cover these costs and shows customers you are trying to make it right.
5. Helps Return to Normal Operations
After a cyber-attack, a small business finds itself in a vulnerable position. Computer systems may be damaged in the wake of a hack needing repair or replacement. Hardware and software upgrades and training for all employees can get expensive.
Also, business data is likely damaged and possibly destroyed altogether. Cyber insurance helps small businesses start the recovery and restoration process.
A Recap of Cyber Security Insurance
Cyber attacks are common and powerful. A cyber breach can cripple a company’s computer systems and permanently destroy data. The recovery and restoration process may cost millions.
The good news is that your company can acquire protection through the insurance market. If you are interested in cyber security insurance, please contact us to schedule an appointment.