Cyber insurance is an effective way to protect a business against losses following a cyberattack. With cyber risks more prominent than ever before, it is essential for online companies to identify potential vulnerabilities and take the necessary steps to safeguard their investment.
A cyber insurance policy is an important financial product that allows businesses to proactively protect against cyber incidents that could negatively impact their finances, operations and reputation.
Why Your Online Business Needs Cyber Insurance
A cyberattack is more than an inconvenience; it could potentially force an online business to shut down permanently. Here are some top reasons why online businesses benefit from cyber insurance:
1. Online Businesses are a Common Target
According to the University of Maryland, there is a new cyberattack somewhere on the web every 39 seconds. Online businesses are a top target for cybercriminals as they possess key assets that criminals want to exploit for financial gain or other reasons.
These hackers often rely on brute-force attacks to gain access, such as guessing usernames and passwords, using password generator tools, trying generic passwords, or engaging in phishing emails or social engineering.
2. Online Businesses Store Sensitive Customer Information
Each time that a user interacts with an online business, whether it is to sign up for email notifications, create an account or make a purchase, the business receives and stores personal information.
Many online businesses possess databases with millions of names, email addresses, mailing addresses, credit card numbers and other private data belonging to customers or prospective customers.
When hackers gain access to this information, they can use it to open fraudulent accounts or even extort the business for payments.
3. The Cost of Cybercrimes Can Be Significant
According to a report by the Ponemon Institute and IBM, the average data breach cost for companies with fewer than 500 employees is $2.98 million.
In addition, the average cost per breached record is $164, meaning the more records breached, the more that an online business must pay out to recover.
There are many financial elements to consider when it comes to cybercrimes, such as IT costs, accounting costs, legal fees, business interruption expenses and reputational management services.
4. Online Businesses May Not Have Adequate Security
Startups and other small online businesses often do not have proper security measures in place to protect against cyberattacks. Professional IT solutions can be quite costly and most small businesses do not have the funds required to purchase and implement these advanced solutions.
Hackers understand this and often try to exploit these small online businesses by finding gaps in their security, such as with SQL injections (SQLIs), spyware, man-in-the-middle (MitM) attacks, remote code execution and similar tactics.
5. Business Insurance Does Not Cover Cyberattacks
Many online businesses have business insurance that can help cover lost business income, lawsuits and other covered losses. Unfortunately, most business insurance policies specifically exclude cyberattacks.
This means that business insurance is unlikely to cover an online business in the event of data loss, including attacks due to employee sabotage or criminal hacking.
How Cyber Insurance Can Protect Online Businesses
Cyber insurance is one of the best ways that online businesses can protect against financial losses caused by incidents such as system hacking, data breaches, ransomware extortion payments and similar cybersecurity crimes.
A cyber insurance policy generally provides either first-party or liability coverage. First-party cyber insurance typically covers the costs of expenses, such as the investigation of the incident, lost revenue due to business interruption, risk assessment of potential future cybersecurity attacks and ransomware attack payments.
Third-party or cyber liability coverage can protect an online business in the event that the business is sued for damages as a result of a cyberattack. Cyber liability coverage typically pays for regulatory fines for noncompliance, court judgments and settlements, and court and attorney fees.
Nearly every type of online business can benefit from cyber insurance, regardless of size or industry. This includes businesses that store important or sensitive data, such as credit card numbers, phone numbers or Social Security numbers, online or on computers.
Online businesses that have large customer bases should also consider cyber insurance to ensure that affected customers are promptly notified following a data breach or to help cover regulatory fines that a business might be subjected to following a cybersecurity incident.
Trust Atlas to Provide a Custom Cyber Liability Insurance Policy
Atlas Insurance Agency provides online businesses with a variety of coverage options to protect against cyberattacks and other cybersecurity incidents, such as protection against business interruption as a result of a digital attack, assistance with litigation expenses and defense against cyber extortion.
Atlas has helped countless online businesses get the customized policy they need to protect against a variety of cyber risks. To learn more about cyber insurance or to request an insurance quote, contact Atlas today at (808) 400-6634.