Business Insurance Basics: Cyber Liability Protections
As a business owner, insurance is necessary to protect your investment. Most business owners understand the importance of traditional business insurance and a liability umbrella policy, but what a lot of business owners don't understand is the importance of cyber liability coverage. Before you finalize your company's insurance portfolio, you should understand cyber liability insurance and what it can do for your business. Here's a look at some of the things that you need to know.
What Exactly Is Cyber Liability Insurance?
Cyber liability insurance is a form of protection for businesses in case of a data breach that puts employee or customer data at risk. With consumer privacy laws becoming more important than ever, business owners need to prioritize insurance coverage that will help cover any potential damages due to a loss like this.
Why Do You Need Cyber Liability Insurance?
Many business owners dismiss the need for an actual cyber liability policy because they believe that their commercial liability coverage or their business insurance would be sufficient for losses of this sort. However, most commercial liability policies and business insurance policies have strict limitations for the amount of coverage those policies will pay out on losses like this. Since data breach losses can be significant, insurance coverage of this sort is often insufficient. That's why most companies carry additional cyber liability coverage exclusively for these instances.
What Kinds Of Things Does Cyber Liability Insurance Cover?
While it's pretty obvious that cyber liability insurance will cover losses due to data breaches and exposed information, that's not the only thing that you can get coverage for as part of your cyber liability insurance policy.
Cyber liability insurance will also cover the investigations, data restoration, and device replacement expenses associated with the theft or loss of the company's electronic and digital devices. You can also obtain reimbursement for any forensic investigation costs, fines, lost earnings due to downtime or customer loss, crisis management costs, and even the fees paid for access restoration as a result of a ransomware attack.
If you find that you have to pay restitution to customers or clients as a result of a data breach, most cyber liability insurance will cover this type of third-party expense as well. Any lawsuits filed against your company can be paid through your cyber liability coverage, and any breach of contract, libel, or slander settlements can also be covered.
What Affects Cyber Liability Premiums?
As a business owner, if you're thinking about investing in cyber liability insurance, you should also understand the factors that affect the cost of your premiums. This helps you to assess your costs and ensure that you have the coverage that you need.
The liability limits you choose for your policy will have a significant effect on your premiums. The higher your liability limit, the greater your premium will be. Consider how much coverage you want to have for potential losses, and ensure that your liability limit will cover those costs.
Additionally, the industry that you are in will also contribute to the cost of your premiums. The higher the risk associated with your industry, the higher your premiums will be due to the risk factors associated with it. You may also find that you receive discounts and cost savings if you take extra security measures to protect your company's data or limit access.
Understanding the importance of cyber liability insurance and how it can protect your business can help you to see what makes this investment so worthwhile. Talk with a business insurance agent near you today for more help and information. He or she will help you determine how much coverage is right for your business.