With companies falling prey to devastating cyber attacks on what seems like a daily basis, small business owners would be wise to consider investing in cyber insurance. Here’s an explanation of what cyber insurance is, what it covers and how it might benefit your company.
What is cyber insurance?
While you already have insurance protecting your business against natural disasters or theft, your current policy may not include a data breach of your business’s computer network. As this Yahoo! Small Business Advisor post points out, cyber insurance will cover your losses if your business is disrupted by a nonphysical system outage caused by a virus or other unauthorized intrusion into your network.
Don’t hackers only target big businesses?
Although generally only the hacking of major national retailers and massive telecommunications companies make the news, hackers are interested in stealing payment card data and personal information, regardless of where it comes from. This Wired article illustrates how wide-ranging the danger of cyber attacks are by detailing how 13 hackers were able to steal more than $2 million by hacking the credit card terminals located at a number of gas stations in the southern United States.
If I don’t work in a cash-intensive business, why do I need cyber insurance?
Regardless of what industry you work in, a cyber attack can devastate your business. Hackers looking for personal information have no qualms about completely ripping your company’s data infrastructure apart when seeking consumer data. In the aftermath of the hack, you could find that any computer terminals or mobile devices linked to your network have been rendered inoperative. In addition to covering the profits you lost when your business was temporarily out of operation, cyber insurance also covers the cost of the investigation into how your systems were compromised, letting customers know that their data has been exposed and replacing any equipment that was damaged in the hack.
Is cyber insurance expensive?
In general, adding cyber attack coverage to an existing insurance policy is not overly expensive as it only usually adds between $850 to $2,000 to the cost of your premium annually. However, fines levied against your business by the Federal Trade Commission, the Federal Communications Commission and your financial institution can be extraordinarily expensive. As this Entrepreneur piece points out, the FTC and FCC have recently been hitting businesses with significant financial penalties for putting consumer data at risk. Additionally, credit card processors and banks might saddle your company with massive fines after a breach to recoup some of the money they have to spend on issuing new credit cards and covering fraudulent charges. One business was hit with more than $6 million in credit card processor and bank fees in the aftermath of a high-profile data breach. That’s not even including the costs associated with being subject to a class-action suit brought by disgruntled customers. As such, it’s a good idea for every small business owner to purchase cyber insurance to protect themselves against such devastating liability.
This article was written by Mario McKellop of Examiner.com for CBS Small Business Pulse.