Cybercrime is a high-stakes cat-and-mouse game. Unfortunately, it often seems that the mice, i.e., the cybercriminals, have the upper hand. A disconcerting thought in general, but particularly if you run a small business. While data breaches involving large organizations make the biggest headlines, 55% of small businesses have experienced at least one data breach. Unfair though it may seem, if you are the victim of a cyber-attack, you could be liable for damages that result.
Do You Need Cyber Liability Insurance?
If you sell goods or services through your website and/or if you send or store sensitive customer or employee data electronically, you may benefit from cyber liability insurance. In the event of a breach, you have a responsibility to inform affected parties, e.g., customers and employees, that their data may have been compromised. If customers or employers come to harm as a result of the breach, you may be responsible for paying their damages if a court finds you liable.
What Does a Cyber Liability Policy Cover?
A cyber liability policy covers the costs to your business to recover from a cyber attack. These may include repairing damage to computer systems, recovering compromised data, and notifying your customers about the breach. These are considered first-party coverages. A cyber liability policy also covers third-party claims. An example would be if one or more customers were to sue you for negligence, alleging that you could have done more to prevent the data breach.