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Is Your Business at Risk?

Why Cyber Liability Coverage Is Good Idea

From insuring your employees to protecting against lawsuits, running a business always involves liabilities. But now, with the rise of the digital sphere, data has become one of the fastest growing assets for business owners. That means data loss is now a critical liability.

That’s why cyber liability insurance is so important. Cyber threats can involve everything from identity theft to monetary theft and data corruption—all of which have the potential to cripple or outright destroy your business.

What Sorts of Data Should You Protect?

The most critical data to look out for is anything related to your business that contains two or more pieces of Personally Identifiable Information (PII). This is any digital information that can be used to identify, locate, or contact any person in your organization. This can be a combination of a name with a physical address, email address, or phone number.

Since PII data can potentially be used to steal identities, money, or intellectual property from your business, it is a magnet for cybercriminals—whose methods and technology are becoming more and more sophisticated every day.

What Happens if You Don’t Have Coverage?

Data breaches are covered by both state and federal statutes, which in most cases require business owners to notify and protect the person or persons impacted by the theft of PII data. This can involve notifying the state’s attorney general, sending out written notifications to employees, and providing identity protection services for anyone affected by the breach. In some cases, business owners can also be fined for data breaches. This can end up costing anywhere from $150 – $300 per data point, which can very quickly add up thousands of dollars. And without specific cyber liability coverage, that can end up coming straight out of your business’ coffers.

What Kind of Coverage Do You Need?

Standard insurance policies, even large umbrella policies, will not cover the expenses related to a data breach unless cyber liability is specifically stated in the insurance plan. And even if you have a cyber liability rider attached to your standard policy, these low-cost options often aren’t robust enough to cover you comfortably.

Since each individual business has different needs and circumstances regarding cyber protection and data management, your cyber liability coverage should be custom-tailored to meet the specific demands of your business.

Getting Covered

The need for data liability coverage is obvious and straightforward, but the application process… not so much. When applying for tailored cyber liability coverage, you will be expected to know a lot of minute details about your business’ digital structure, and you will have to answer a great deal of detailed questions about your business, including questions about revenue, personnel, and your customers, as well as tech-specific questions about data storage and your current breach-prevention procedures. But while this is process might be tedious, it is also extremely helpful. Many business owners find that the application process itself enlightened them to a lot of things they didn’t know about their businesses. And many are surprised to find how vulnerable they truly are.

 

The bottom line is that while the process might be a pain, the cost of avoiding data liability can be infinitely more painful. If you’re having questions about your own data protection measures, and think you might need cyber liability insurance, start doing some research today, and reach out to your insurance provider to see what options might be right for you.

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