Who is this for?

This article is for solopreneurs and small business owners with 10 (or fewer) employees or contractors who primarily sell digital products online. Many of the business owners we work with have customers, employees, and vendors who are located in different worldwide locations.

What Is Cyber Insurance?

Car insurance, workmen's comp insurance, business insurance - so many insurance policies, so little time. Add into the mix the newest policy option: Cyber insurance (or cyber liability insurance).

Cyber liability insurance provides coverage to businesses to offset the financial risks associated with cyberattacks, data breaches, and other forms of cyber incidents. It provides coverage for a range of potential losses caused by a cyber attack, such as the theft of sensitive information, damage to IT systems, or extortion through ransomware.

Why You Might Consider Cyber Insurance

1. Small Businesses Are Targets
   Contrary to popular belief, cybercriminals like to target small businesses because they assume (usually correctly) that these businesses have weak security that will be easy to break. In fact, recent security reports show that 46% of data breaches now involve small businesses.

2. Financial Mitigation
   The total financial costs of a cyber attack have grown shockingly high in recent years. Between lost revenue, downtime, repair costs, and more the average costs per incident now range from $25 to 31k. Having a robust cyber insurance policy may help mitigate some of the financial impact of a cyber attack.

3. Contractual Requirements
   If your business does work (or wants to do work) with the government or on behalf of large businesses, you should expect that you will be contractually required to have a cyber insurance policy that has adequate coverage.

What Can Cyber Insurance Cover?

Cyber insurance policies can be as diverse as a car or home insurance policy. Who provides the policy, what they cover, and how much they cover will all impact the cost of your policy.

While the policies may vary, here are some common items that may be covered include-

• Data Breach Response Costs: Covers expenses to informing customers, employees, or regulators in the event of a data breach. It may also cover credit monitoring, legal counsel, and regulatory fines.

• Business Interruption Costs: Covers loss of income and potentially the expenses required to fix them.

• Extortion and Ransomware Costs: Covers ransomware costs to recover your data and/or the costs of professionals to help.

• Forensic Investigation Costs: Covers experts to investigate what happened after a cyber attack.

• Regulatory Fines and Penalties: Covers fines and penalties imposed by government entities.

• Public Relations and Reputation Management Costs: Covers of hiring PR professionals to manage repetitional damage.

• Third-Party Liability Costs: Covers damage to other companies (such as vendors) for a cyber attack.

Should You Get A Policy For Your Business?

That all sounds great! We should all go get cyber insurance right now. Right?

While it can be a powerful protection tool for your business, there are a few things to consider before you call your broker.

You Might Not Be Able to Get One

Before they will issue a policy, cyber insurers will expect your company meets their basic cybersecurity standards. These can vary from provider to provider, but common requirements you will need to prove include: showing that you do regular data backups, have formal employee training, have established endpoint protection, regularly do patch management, have vendor management, an incident response plan, and usually more.

They Don't Always Pay Out

Assuming you meet the requirements to get one, you will need to make sure that you maintain those cybersecurity requirements to make sure the policy payouts. In 2023, while the number of cyber attacks and breaches skyrocketed, the number of policies with partial or no payouts also increased to 27%.

They Cost Money

Obvious, we know, but there is no such thing as a free lunch. The premiums for a policy, depending on the type of data you store (like healthcare) and the level of coverage can vary wildly. For a small business with $500k to 1M in coverage can range from $1,200 to $5,000 in premiums. And while they have recently leveled-off, the costs for cyber insurance (along with all other insurance) has as much as doubled in recent years.

Summary & Next Steps

When weighing whether cyber insurance is right for your business, consider the level of insurance your company might need and whether your business is can meet and sustain the necessary cyber standards required for a policy. Keep in mind that while cyber insurance can provide a layer of financial protection, it is not a substitute for proactively protecting your business. In fact, without strong cybersecurity protection in place, there is a good chance your policy won't even pay out in the event of a breach.

What Else Can You Do to Protect Your Business?

While cyber insurance can be an extra layer of protection for your business, there are other things you can do today to protect yourself from cyber criminals. That's why we created Small Business Owner security Survival Guides. They are simple, easy-to-follow instructions that show you how to:

• Prevent cyber attacks before they happen and

• Quickly recover if you do get hacked

No jargon and no technical expertise required. Simple business security that works. Click here to get yours.

Is your business under attack? Get the FREE guide to find out.

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