Why Does Your Business Need Cyber Liability Insurance?
In the past, most businesses retained their data either in a hard copy format, such as paper records and files, or on a private computer server that was stored within their building. However, cloud-based software has exploded in recent years. It offers affordable and scalable methods for data management to companies of all sizes. The data can be accessed from virtually anywhere, allowing businesses to operate remotely or after hours as-needed.
While there are numerous benefits to the digital data transformation, it also leaves companies vulnerable to cyber attackers and potential data breaches. Cyber liability insurance can protect your business, should the unfortunate occur. In most cases, it is not included as part of your general liability insurance, so you will need to speak with your agent to add this to your policy. Here are some ways you can stay protected and determine if this is right for your business.
The majority of companies today, whether they are major corporations or small, locally-owned operations, use the internet and technology to conduct business in some way. Regardless of whether your business uses the internet only to send emails or manage your entire portfolio of clients, your data could be hacked and used against you.
If you use technology at all, it is a good idea to speak with your agent about cyber liability insurance. Should a breach occur, you and your business would not be held liable for any damage that occurs.
When you handle sensitive information about your clients, such as billing details, financial records, or even simply names and addresses, your clients are trusting you to keep these details private. Should a cyber attacker obtain this data, they can use it in many ways. These range from posing as your company to “phish” for additional confidential information to making client details available publicly.
This can be damaging and even embarrassing for your customers, but it can also severely harm your company’s reputation. By ensuring that you have cyber liability insurance, you can cover the expensive yet vital processes such as notifying clients about a data breach, restoring clients’ compromised identities, recovering corrupted data, and repairing damaged software.
Businesses may also decide to obtain cyber liability insurance if they retain confidential data of their own such as trade secrets, privately developed software, and other intellectual property, or even simply their employees’ Social Security Numbers. If this information is stolen by cyber attackers, the added liability insurance can even cover the cost of legal expenses, forensic investigation, and loss of business income during the time of the breach. Any stolen data that is used without your consent or knowledge is legally protected. This allows for a quicker recovery of the data, along with a more streamlined litigation process so your business can return back to normal as soon as possible.
Cyber liability insurance is a vital safeguard against potential hackers. While you hope never to experience a data breach to begin with, having this additional coverage can significantly improve your company’s reputation, your clients’ trust, and the digital security of your employees and private intellectual property.