3 Key Things You Need to Know About Cyber Liability Insurance

Data breaches and other cybercrimes are becoming increasingly common.  But it’s not just large organizations that are at risk. Small and medium-sized businesses are equally, if not more, attractive targets for cybercriminals because they often lack the robust security infrastructure of larger organizations. Many owners report feeling vulnerable to cyberattacks, highlighting the importance of proactive cybersecurity measures and insurance coverage. If your business falls victim to cybercrime, recovery costs can be significant—including specialized repairs, legal fees, and damage to your brand’s reputation. That’s why cyber liability insurance can be a smart precaution for businesses of all sizes.

Below, you’ll find key elements of cyber liability insurance, but first, let’s define it.

What is Cyber Liability Insurance?

Cyber liability insurance is a policy that provides organizations with coverage options to help protect against data breaches and other cybersecurity incidents.

What Does Cyber Liability Insurance Cover?

Although policies may vary by provider, basic coverage typically includes costs associated with data breaches and cyberattacks. Additional coverage, depending on the policy, may include:

• Regulatory fines
• Investigative services
• Data and identity recovery
• Lost income due to a cybersecurity incident
• Public relations costs to restore brand reputation
• Costs for repairing damaged computer systems and additional hardware
• Damage impacting your customers or business partners (legal fees, settlement costs, and customer notification)

How Much Does Cyber Liability Insurance Cost?

According to Insureon, the median cost of cyber liability insurance is $140 per month (or $1,675 per year) for small businesses. However, the total costs of coverage will depend on several factors, including:

• Your claims history
• Your network security strength
• Your company’s size and revenue
• Your company’s exposure to cybersecurity threats
• The amount of insurance coverage your company needs
• The number of people who have access to your systems and critical data

Reducing Risk and Insurance Costs

There are simple steps organizations can take to reduce both the cost of cyber liability insurance and the risk of cyberattacks:

• Implement end-user security training: Cybersecurity awareness and training programs, such as NINJIO, help employees recognize threats like phishing and ransomware, strengthening your organization’s first line of defense.

• Enable multi-factor authentication: Ensure all employees use multi-factor authentication on their accounts, and keep antivirus and malware software up to date to patch known vulnerabilities.

• Review your backup and recovery plan: Beyond standard data backups, businesses should consider backing up critical business applications, network resources, and software. Backups should be stored securely so ransomware attackers cannot encrypt or delete them.

How Much Cyber Liability Insurance Do I Need?

There is no one-size-fits-all policy. Coverage depends on factors such as company size and specific risk exposure based on industry segment. It’s important to speak with a certified agent to determine the right coverage level. Consider questions like:

• Does your organization collect, store, or transmit sensitive personal or health information?

• Is your organization in a highly regulated industry such as accounting, education, legal, finance, or healthcare?

Business owners should work with IT service providers to ensure their infrastructure meets cybersecurity standards. Doing so can help qualify for cost-effective cyber liability insurance coverage and ensure your organization is better prepared for potential cyber incidents.