Words of wisdom from our business insurance experts.
Is It Worth Having Cyber Liability Insurance for a Small Business?
Nowadays, most companies digitize important documents and store financial information via their computers or secure networks. Though digitized information can be secure and is a more convenient way of performing business, it does come with its share of risks. In the U.S., cyberattacks cost businesses billions of dollars every year.
While digitizing and using electronic forms of payment and storage for essential documents makes sense for most businesses, companies should also pay attention to the risk of cyberattacks and lawsuits based on data loss. Without cyber liability insurance, companies can suffer devastating losses due to cybercrime.
What Is Cyber Liability Insurance?
Liability insurance protects your company against financial loss. Cyber liability protects your company from loss associated with data breaches, cybercrime and malicious attacks. Your employees and clients rely on your company to protect their data. When cybercriminals attack your company, they may be able to access various digital files with sensitive information, including your employees' and clients' personal and financial information.
Following a cyberattack, you may have to pay expenses associated with financial losses for other victims, the legal fees and other financial losses that your business suffers as a result. You protect your financial profile when you have liability insurance geared towards cyberattacks. This insurance helps compensate for the financial loss.
What Cybersecurity Risks Do Small Businesses Have?
Data breaches, on average, cost small to medium-sized businesses about $100,000 with cyber liability insurance. A cyberattack can disrupt your business putting it out of commission while you repair the exploits in the system and secure your network. It can also cost you your reputation with clients. For example, if cybercriminals steal your customers' financial data, the news of the attack could harm your business's reputation. Clients may think that they cannot trust you with personal information.
Cybercriminals Prefer Small Businesses
Most people assume that cybercriminals only target large corporations. The media generally focuses such attacks because they are famous and tend to affect millions of people at a time. However, most online criminals target small businesses because they do not have the same resources large corporations do. They cannot always afford the best protection or staff to protect against a data breach and do not carry cyber liability insurance.
Cybercriminals can quickly jump from one small business to the next, using a variety of attacks:
- Malware is the umbrella term for malicious software, including ransomware and spyware, that uses vulnerabilities in your software. This software damages servers, computers and networks. It can also restrict your access until you pay some form of ransom.
- Viruses are programs that spread from computer to computer on a network, much like a disease. Hackers may use viruses to access systems and cause significant damage.
- Phishing involves using a malicious website or email to infect a system or collect sensitive information.
To determine your business's vulnerability to any of these attacks, you need to do a cybersecurity risk assessment to protect your company's data better.
Businesses Must Pay for Data Breach
You are responsible for a third-party data breach that affects:
- Financial data
- Social Security numbers
- Personal information
- Medical information
- Personal and professional email exchanges
In addition to paying the cost of damages associated with the losses, you also have to pay to restore customers' identities, recover data, repair damaged systems and notify the consumer. Cyber liability insurance can cover these costs and may help inform the consumer and repair your system after an attack.
How Can Small Businesses Protect Themselves Against Cyberattacks?
While insurance is critical for your company, you should also protect your business by taking a reasonable approach to data security. The more steps you take to protect your company, the less liability you have.
Keep Networks Secure
Network security is critical. Encrypt all of your information and use a firewall to protect it. Your company's Wi-Fi network should never be public. Keep it hidden and secure without broadcasting its name. If you want to offer Wi-Fi access to the public, you should have two separate Wi-Fi networks. One network can house your company's data and be accessible to employees, whereas another can be a public network with no secure data.
If you have employees who work from home, have them connect to your network from home using a virtual private network. This connection keeps your files more secure than trusting your employee's at-home network.
Use Anti-Fraud Services
Cyber liability insurance can protect the overall costs associated with criminal activity, but you still have to take proper precautions when handling client payments. Have secure payment processing in place. Small businesses can work with bank or card processors to ensure they have the latest anti-fraud services and tools. Analyze which systems are most secure and isolate payment systems that may be less secure.
Train All Employees
Many phishing scams and other cyberattacks start at the employee level. For example, an employee receives a phishing email and believes it to be official, follows the link and provides log-in information to the cybercriminal. Employees must learn the basics of cyberattack prevention and how to avoid suspicious emails, downloads and phishing scams. Additionally, they should understand the importance of protecting sensitive information and preventing suspicious downloads.
Teach employees about multi-factor authentication, which verifies a person's identity by asking them to provide more verification along with their username and password. MFA may include a phrase or PIN, authentication through a code sent to the individual's phone, fingerprints, and facial recognition.
Keep Antivirus Software Up to Date
Your company's antivirus software should be regularly updated. Over time, cybercriminals learn how to exploit different types of antivirus software. As criminals create new types of malware, antivirus makers create patches and updates to fight against new threats. You could be vulnerable to hackers if you have out-of-date software or have not configured your software to update automatically.
Find Cyber Liability Insurance for Your Small Business
At Fullsteam, we understand how important your business is to your livelihood. One lawsuit can bring a small business to its knees. You deserve insurance options that fit your budget and can protect you against the various hazards of running a company, including cyber liability insurance.
Get started with a quote from Fullsteam today!