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Are you a small business owner or entrepreneur trying to protect yourself from the threats of cybercrime? As the global digital landscape continues to evolve, cyber-attacks are becoming more frequent and malicious. Ransomware, phishing scams, and data breaches are now part of life as a small business operator.

It can be difficult to protect against all potential forms of cyber risk. Many small business owners mistakenly assume that their general liability insurance will cover them, however, this is not always the case. Cyber insurance has become an essential feature for many businesses operating today to bring peace of mind and financial protection against cyber criminals’ sophisticated methods.

If you own a small business, you must protect yourself by investing in cyber insurance. Not only does it help you protect your customers’ data from loss or theft but also offers safe protection against ransomware attacks, data breaches, identity theft, and other threats posed by the ever-evolving cybercriminal underworld. In this article, we explain why cyber insurance is so worth investing in for the benefit of your company’s long-term success and answer some of the most common questions on the topic.

Table of Contents

• Table of Contents
• Why is cyber insurance important for small businesses?
• Who needs cyber insurance?
• Won't my general liability policy cover cyber liability?
• What Cyber Insurance Covers
• What isn't covered by cyber insurance?
• Where Are Your Most Critical Cybersecurity Gaps?
• How to Choose Cyber Insurance
• Selecting a Policy
• Selecting a Provider
• What to expect when applying for cybersecurity insurance
• How do I know if I qualify?

Why is cyber insurance important for small businesses?

Cyber insurance is important for small businesses because it helps to cover you in the case of a loss. That loss could be a result of being the target of a ransomware attack or your computer getting infected with a virus (and anything in between). There's a broad range of incidents that cyber insurance coverage covers.

Additionally, what is covered by cyber insurance is typically different from what's covered by your insurance company's general liability policies.

Who needs cyber insurance?

If your business touches any type of data and losing access to (or altogether eliminating) that data could potentially cause you to shut down, you need cyber coverage. It doesn't matter if your business is large or small, or if you are a solopreneur or have a team. If you're at risk of losing data integral to your operations (or your customer's operations), get a cyber policy.

Won't my general liability policy cover cyber liability?

General liability insurance does not typically cover cyber attacks or data loss. Cyber liability insurance is a separate policy specifically devoted to protecting against cyber threats and data loss. In the event of a cyber attack, the cost of repairs, customer notification, and other related expenses can be covered by cyber liability insurance. Businesses should work with an insurer to assess their specific risk and determine if they should get additional coverage for cyber attacks.

What Cyber Insurance Covers

Cyber insurance provides protection from the costs associated with a data breach. It can cover legal costs related to compliance and judgment and can provide access to experts who can help manage an incident. In addition, most policies will reimburse losses caused by data theft or data exposure (such as credit card fraud). 

Additionally, cyber insurance provides coverage for damage to digital assets, such as computers, websites, and data. It helps cover costs related to identity theft (such as fraud prevention services and credit monitoring) and it protects businesses from liability resulting from the online activities of employees.

The majority of cyber security insurance policies provide coverage for some form of business interruption and remediation, too. Depending on the policy, this may include a period of lost income and reasonable costs your business suffers as a result of an attack or the cost of hiring outside help to investigate the attack and eliminate any evidence that can be used by attackers in future attacks.

What isn't covered by cyber insurance?

Property damage, technology improvements/upgrades, and damage that results from criminal actions like employee theft, robbery, or fraud are not typically covered by a cyber insurance policy.

Where Are Your Most Critical Cybersecurity Gaps?

There are a few common - and extremely critical - cybersecurity gaps found in most small businesses. 

1. Weak passwords: Employees may use simple and guessable passwords for increased convenience without considering the security risks.
2. Lack of cybersecurity training: Without proper awareness, staff members can fall prey to phishing scams or malware attacks.
3. Poor patching and update strategies: Failing to apply patches can leave your system vulnerable to exploits.
4. Misconfigured systems or networks: Misconfigured network settings or services can be an easy way in for malicious actors.

If you still don't believe you need cyber insurance coverage, ask yourself if your business might be vulnerable to any of the gaps listed above. If so, you should absolutely get coverage. 

How to Choose Cyber Insurance

When choosing a cyber insurance policy for your business, evaluate both the policy and the provider

Selecting a Policy 

• When selecting a policy, consider the limits on coverage for expenses and damages and find out how quickly the insurer will respond and provide resources in case of a claim.
• Cost is also something to consider. Bear in mind that several factors can affect the cost of cyber insurance, including the size and complexity of your organization, your industry, and the sensitivity of your data. Talk through these with a potential provider before making a decision. 
• Finally, ask yourself whether or not a policy is flexible enough to adapt as your business grows. If not, you might consider one that can. 

Selecting a Provider 

• When selecting a cyber insurance provider, make sure you understand whether they will assist with compliance and regulatory requirements. Also, make sure they can explain to you whether the policies they offer will give you the right amount of cyber insurance. 
• How do you know if you have the right amount of cyber insurance? In addition to these standard protections of a policy, ask your provider if your policy also provides coverage for: 
• any costs associated with recovering your data or systems in the case of a breach or computer attack
• any losses caused by your business operations, including errors and omissions, negligence and third-party damages

What to expect when applying for cybersecurity insurance

It's important to evaluate how much risk you are exposed to before committing to a policy or provider, too. When applying for a policy, expect: 

• a comprehensive assessment of the potential risks to your cyber security
• an evaluation of any existing policies you have in place to protect from cyber breaches.

How do I know if I qualify?

Before committing to a policy or provider, you may want to verify that you're even eligible for coverage. This can be difficult to assess on your own; fortunately, there are professionals who can help you determine whether you are qualified and how much risk you are exposed to. Reach out to a trusted IT security firm or cyber risk consultant. As they evaluate your risk, they should be able to help you put into place the items you'll need to qualify for a policy. These include:

• a documented security policy
• evidence of adequate risk assessment and management processes
• updated firewall, antivirus software, and intrusion detection systems
• measures to secure employee access to confidential data

Twin Pines Can Help You Qualify For Cyber Insurance Coverage

Want to ensure your business is safe from the entire gamut of possible cyber crimes? Twin Pines can help. Call our team to learn how we protect your small business's data against cyber threats today.