Why Your Small Business Needs Cybersecurity Insurance
Imagine this: Overnight, your business is hit with a data breach. You wake up to panicked texts and emails from your IT staff, your CFO and your HR director. Employee data and customer data have been stolen, and now you’re facing regulatory fines and potential lawsuits from customers and employees.
Scary, right? It’s a sobering thought, but most companies are just one stroke of bad luck away from a cyber attack.
Consider the statistics:
- Only one-third of small to midsize businesses have implemented new systems or technology to ensure security in the last year. (Verizon Small Business Survey 2023)
- Forty-five percent (45%) of SMBs say they haven’t trained their employees on cybersecurity safety. (Verizon Small Business Survey 2023)
- In 2022, 76% of organizations were the targets of ransomware attacks, out of which 64% were infected. Only 50% of these organizations managed to retrieve their data after paying the ransom. About two-thirds of respondents reported to have had multiple, isolated infections. (CSO Online)
- Humans are responsible for 76% of attacks, stemming from issues like errors, misuse of privileges, use of stolen credentials and social engineering. (Verizon 2023 Data Breach Investigations Report)
- Lost business — including business disruptions, downtime, and the cost of losing customers and acquiring new customers — makes up 29% of the cost of a data breach. (IBM Cost of a Data Breach Report 2023)
That’s why protecting yourself from cyberattacks is so important. But if one does occur, having cybersecurity insurance in place can be a big relief.
Who should be covered by a cyber insurance policy?
Long story short: Just about every company should make sure they’re covered. Even if your business is small, you could face tremendous costs, fines and lost revenue from a cyber attack. Accenture reported that 43% of attacks are aimed at SMBs, but only 14% of these businesses are prepared to defend themselves.
According to a 2021 SBA survey, 88% of small-business owners feel they’re vulnerable to an attack. Yet only 8% of businesses with fewer than 50 employees have a dedicated cybersecurity budget. Most of those small businesses (77%) say that’s because it’s all so complex.
But putting your head in the sand won’t solve your cybersecurity challenges. Of course, the best practice is to have the proper protections in place to prevent an attack. But the next-best practice is to have cyber insurance to help you recover.
What kind of cyber insurance coverage should a business have?
Cyber insurance protects your business in a variety of ways. According to the Federal Trade Commission, you should look for a policy that includes coverage for attacks:
- On your data on your networks
- On your data held by vendors or other third-party providers
- Originating worldwide (not just the United States)
The coverage you choose should include a “duty to defend” clause, which means the insurance company will work to defend you in a lawsuit or regulatory investigation.
The FTC recommends protecting your business with both first-party coverage and third-party coverage. First-party coverage takes care of your business’s costs to recover. Third-party coverage protects your company from liabilities stemming from damage to other individuals or businesses. It should cover costs related to:
- Payments to affected customers
- Expenses from disputes or lawsuits
- Defamation and copyright or trademark infringement
- Litigation and responding to regulatory inquiries
Overwhelmed? Cenetric can help
If you need help selecting the right cyber insurance, Cenetric has several providers we can connect you with to make sure you’re protected after a cybersecurity incident.
Want to make sure you’re covered from every angle? Our team has the experience and availability to help you prevent an attack — or respond if you’ve already been hit. Let’s set up a time to talk about cybersecurity.