It is an unfortunate aspect of life today: Cybercriminals are continually developing new tactics and mounting more sophisticated attacks. Consequently, they continue to be successful at breaching digital defences, stealing data and taking control of computers and networks.

Stories about large databases being compromised or entire companies or municipalities being locked out of their computers in so-called ransomware attacks make headlines regularly. And there is no reason to believe that cybercrime will decrease in the years to come.

If you're a business owner or decision-maker, what should you do? Simply crossing your fingers and hoping that your business doesn't become the target of a cyberattack isn't a viable strategy. You have to take action to protect your systems and data.

But even the best digital defences can't guarantee that a determined bad actor won't gain unauthorized access to your systems. That's where cybersecurity insurance comes in. Sometimes simply called cyber insurance, cyber coverage or cyber liability insurance, it's a type of small business insurance that can help pay the costs resulting from a cyberattack.

When you've implemented the latest cybersecurity measures and purchased cyber insurance, you can be confident you've done all you can to protect your business from cybercriminals.

What is cyber insurance?

Cyber insurance is specialised coverage focused on expenses arising from cyberattacks. It can protect your business from the financial ramifications of someone hacking into your systems, stealing data and using it to commit fraud.

For example, if a bad actor obtains sensitive information about your customers and uses it to make purchases, apply for credit or leverage it in some other way, cyber insurance can help.

Sadly, the costs of just one successful cyberattack can be more than some small businesses can bear. As a result, many companies are forced to close their doors permanently after a significant data breach.

What is covered by cyber insurance?

A typical cyber insurance policy can pay for expenses related to responding to a cyberattack, including:

• Materials sent to customers
• Incident resolution helpline
• Credit report monitoring
• Identity restoration assistance and case management

It may also pay some or all of the costs from lawsuits brought against you for things like credit card fraud.

Insurance companies frequently offer cyber insurance as an add-on to one of these insurance policies:

• General liability insurance: This policy covers damages and legal costs associated with injury claims from non-employees, damage to other people's property caused by your business and more.
• Business owners policy (BOP): Also called property & liability insurance, this type of insurance provides general liability protection plus coverage for the building you own or space you lease and any property needed to run your business.
• Professional liability insurance: Also called errors and omissions (E&O) insurance, this coverage can protect you if a client sues your business over alleged mistakes in the professional advice or services you provide.

First-party and third-party response expenses

It's important to understand the specifics of what cyber insurance covers. Depending on the terms of your policy, it may address first-party response expenses (those incurred by the business), third-party response expenses (those incurred by others) or both.

First-party response expenses typically include things like:

• Forensic IT review
• Legal review
• Notification of affected individuals
• Public relations services
• Services for affected individuals

Third-party response expenses are your liability costs and legal defence expenses.

Who needs cyber insurance?

A better question might be, “Who doesn't need cyber insurance?” You may need cyber insurance coverage if your business handles sensitive information like:

• Credit card numbers
• Personal contact information
• Social Security numbers
• Medical records

Nearly every company possesses some of this type of information.

What does cyber insurance cost?

Cyber insurance coverage is remarkably affordable, given the likelihood of being victimised by cybercriminals at some point and the high cost of recovering from an incident. What you'll pay will vary based on several factors, including your company's size, claims history and others.

However, it's common for a provider to offer tens of thousands of dollars in coverage for as little as a few hundred dollars annually. Insurers increasingly enable potential customers to get instant, self-service policy quotes online. That means you can price cyber insurance whenever it is convenient for you.

How to find a reliable cyber insurance provider

Having adequate cyber insurance is crucial. However, so is getting it from the right company. The last thing you need is to learn that your “bargain” insurance provider and its low-cost policies can't or won't fully cover your expenses following a cyberattack.

Consequently, it's essential to look for an insurance provider that has these characteristics:

• Extensive insurance industry experience: The “new kid on the block” may have catchy ads, but do they have the background that enables them to provide solid, comprehensive coverage for your cybersecurity risks?
• Deep financial reserves: You should expect many things from a small business insurance company, but the most important is its ability to cover your claims. If the company you choose to work with can't pay your incident expenses for some reason, you can be left with a large financial burden. It can even put you in a bind if they pay your claims but only after an extended delay.
• Excellent rates: You shouldn't have to pay more for reliable cyber insurance coverage.
• Attentive customer service: If you're victimized by cybercriminals, you want your insurance provider to be on your side and serve as your guide and advocate.

Don't go another day without cyber insurance coverage

If your business has never been the target of a cyberattack, that's excellent news. However, it doesn't mean it never will. The reality is that a cybercriminal could be lurking just outside your digital doorway, even as you read this article.

Cyber insurance is easy to obtain and affordable to maintain. Getting it today means you, your employees and everyone who relies on your business can rest easier tonight.

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