Businesses of all sizes with digital assets are at risk of cyber attacks. SMBs in particular are increasingly becoming targeted by cybercriminals.
In 2021, the United States experienced a 20% increase in cyber security breaches targeting small business owners. A small business owner’s cost of a cyber attack is an average of $108,000 per data breach.
It’s easy to see that the costs associated with a data breach can be significant. They often exceed what most small businesses can afford on their own. Those without comprehensive cyber insurance coverage can be left struggling to survive in the aftermath of an attack.
Fortunately, a primary benefit of a cyber insurance policy is that it can help protect your business by offsetting the high cost of a data breach.
However, not every cyber insurance coverage policy is the same. Finding the right one for a business needs to be done with care and consideration.
In our article today, we’ll explore what you should look for when seeking cyber insurance and what should be on your cyber insurance coverage checklist as a business.
What is Cyber Insurance Coverage?
Cyber insurance coverage is insurance businesses can purchase to guard against damages sustained from cyber attacks.
As with all general liability insurance policies such as car, life, or home insurance, no two cyber insurance policies are alike. Each one can vary greatly and aren’t suitable for every business.
Purchasing a cyber insurance policy that’s right for a business’s needs is essential for small business owners to protect what they’ve spent years building. Policies are unique and adaptable.
In general, a comprehensive cyber insurance policy should safeguard businesses from:
- Cyber extortion
- The cost of data breaches
- A malware or ransomware attack
- Crisis management and PR expenses
- System damage and business interruption
- Costs associated with litigation from cyberattacks
Cyber Insurance Policy Coverage Requirements for Small Businesses
As we’ve touched on slightly, not all cyber insurance policies are created equal, and smaller-sized companies have unique needs. What’s best for one business’s cyber insurance policy may introduce significant risks for another.
That’s why understanding your business’s coverage requirements before shopping for cyber insurance is a great first step.
A cyber insurance coverage checklist that addresses cyber security risks, budget expectations, and level of need should be followed to determine your business’s cyber insurance policy needs.
Cyber Insurance Coverage Checklist: Three Essentials
1. Know Your Types of Cyber Security Risks
Cyber security risks vary from one business to the next. Risk levels typically vary based on the number of digital assets a business relies upon and how much personal information they store.
For example, a small brick-and-mortar store in a rural area will have very different coverage requirements than a large e-commerce company with locations across the globe.
Those two businesses’ cyber security needs would also be very different from a legal office with remote workers who transfer and share files online each day.
It’s essential to understand that one size does not fit all when finding the right cyber insurance policy.
Evaluate Potential Coverage Gaps
Once a business understands its risks, it can identify potential coverage gaps in its current policy, if they have one. If not, understanding potential threats and coverage gaps will help inform what a business should look for when shopping for new cyber insurance.
2. Know Your Cyber Insurance Policy Budget
Businesses should know how much they will spend on their cyber insurance coverage. Additionally, company leaders need to weigh the cost of a policy against the potential risks and damages they could face if they were to experience a data breach or ransomware attack.
For example, a company that stores sensitive customer information such as credit card numbers, personal health information (PHI), or social security numbers would be wise to invest in a policy with comprehensive coverage in case of a data breach involving their client’s private information.
3. Know Your Business’s Risk Management Needs
An organization’s risk management needs are another critical factor when shopping for cyber insurance. This considers the business’s in-house support protocols to mitigate and protect against cyber risk.
Questions to consider include:
- Do they outsource their cybersecurity services?
- Have they experienced any data breaches in the past?
- Does the company have an in-house IT team for its computer systems?
Answering these questions can help you understand your specific needs and whether you need a comprehensive cyber insurance policy or one with simplified coverage.
Common Cyber Insurance Coverage Mistakes to Avoid
When it comes to finding the right cyber insurance policy, there are a few common mistakes businesses of all sizes should avoid:
- Not Shopping Around: There are many cyber insurance companies, and not all offer the same coverage.
- Not Reading the Fine Print: A business might think they’re getting comprehensive coverage when in reality, they’re not. It’s essential to read the fine print of any policy before signing on the dotted line.
- Not Reviewing Policies Regularly: Business needs continually change, therefore it’s important to review policies regularly to ensure they’re still meeting a company’s needs.
Not Understanding the Policy: A business might think they have an excellent cyber insurance policy, but if they don’t understand what it covers, it won’t keep their network safe from cybercriminals. Working with an insurance broker or agent is essential to ensure a business understands its policy inside and out.
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Get Advice on Cyber Insurance Coverage Policy Requirements From Protek
Cyber insurance is a critical part of any business’s risk management strategy. By taking the time to understand its risks, evaluating potential coverage gaps, and knowing what you need, you can be sure you’re getting the right policy for their specific needs.
As a leading cyber security specialist in Utah, Protek’s experts can advise you on how to choose a cyber insurance policy that suits your company’s needs while following a cyber insurance coverage checklist.
For more information on how we can assist you, please contact us today.