Cyber event expense insurance is designed to help protect small businesses from certain losses associated with data breaches and hacks. Small business owners would turn to their cyber event expense insurance after a hack to help mitigate the costs of notifying their customers that private information may have been compromised and to help with the cost of restoring or recovering the stolen data following a breach.
This type of coverage is particularly important for business professionals who rely on computers and technology for their services.
If you provide services in a digital capacity, if you rely on your computer for your small business, or if you collect and store customer data, employee data or financial records, you should have cyber event expense coverage.
Some examples of small business types that would need this type of insurance include:
- Graphic designers
- Web designers
- Copy writers
- IT technicians
- Financial advisors
- Public relations representatives
Hackers are becoming savvier, making it increasingly difficult for small businesses to defend themselves from a data breach. If a cyber attacker is able to gain access to your computer, network or other electronic system, they may be able to steal client information, employee information, accounting information and other valuable data from you. In situations like this, you’d look to your cyber event expense coverage for assistance. It may be able to help with expenses associated with managing the hack.
These costs may include:
- Incident response expenses
- Data recovery expenses
- Business interruption coverage (add-on coverage option)
This type of coverage is an add-on option for TruShield customers. E-commerce expenses extortion coverage can help in the following situations:
- A hacker gains access to your company’s private information including customer information, client information or employee information, and threatens to sell or disclose it.
- A hacker encrypts or threatens to encrypt electronic data on your company’s computer system, preventing authorized access to anyone.
- A hacker threatens to introduce a virus into your company’s computer system.
- A hacker interrupts or threatens to interrupt your company’s computer system, also known as a denial of service attack.
There are some misconceptions in the small business world pertaining to insurance. Some owners don’t think they need it, while others think it’s too expensive for them. The truth is, no matter how small your business is, or how early you are in the startup process — you’re still at risk for loss, and sometimes that loss can be much more expensive than insurance coverage.
In many cases, the smaller your business is, the worse the implications of a loss can be.
For cyber events, here are a few possible consequences of not having the right coverage:
- Cyber lawsuits often have negative effects on a company’s relationship with its customers. If their private information was stolen during the breach, they may not feel comfortable doing business with you again in the future.
- Due to the recent rise in cyber attacks on small businesses, customers and third-party partners may request that you have this type of insurance coverage before doing business with you. In fact, studies found that only ½ of consumers feel that business are doing what they need to, to safeguard themselves from cyber attacks.
Other types of coverage to consider:
Commercial general liability insurance: Commercial general liability (CGL) insurance is designed to protect you and your business from a loss if you’re found legally liable for bodily injuries or property damage to a third party caused by the product you sell or the service you provide. CGL insurance can also offer protection in situations where you or your employees are conducting business offsite.
Product liability insurance: Product liability insurance is often included in a CGL policy, but not always. It’s important to double check that your small business insurance policy does protect you from risks associated with product liability claims.
Errors and omissions (E&O) insurance: If one of your clients or customers claims your advice caused them a financial loss, your errors and omissions coverage can help you recover from the financial consequences that may incur.
Property insurance: As a small business owner, you likely rely on your property, tools, equipment and technology to help keep your business running. If one of those key pieces of the puzzle was damaged and needed repair, you may not be able to continue operations. This is when you need property insurance coverage.
Equipment breakdown insurance: Your equipment is covered in your property insurance policy for damage caused by external sources, such as fire, floods and weather damage; however, you may not be covered for electrical or mechanical damage. In these situations, you’d look to your equipment breakdown insurance.
Commercial auto insurance: If you or your employees use your vehicle for business purposes you need commercial auto insurance to protect that vehicle in ways your personal auto policy may not be able to.