You know small businesses are more at risk of a cyber-attack?
You also know small businesses are less likely to recover from an attack, right?
Well, don’t take our word for it. The stats speak for themselves:
60% of small businesses hit by hackers go under within 6 months*.
85% of cyber-attacks are on small businesses – that’s around 4,000 a day.
Scary, huh? Yet our recent research reveals most small business owners still have no cyber coverage. Why?
Seems there’s some confusion about it. Like why SMB owners need cyber insurance, what it covers and how it protects your business.
So, here are some answers to questions we’re often asked:
What is cyber insurance?
In a word – survival.
Cyber liability insurance, data breach insurance, cyber security insurance… they’re all names for the same thing. And they all do the same thing – keep your business in business when it’s been hacked.
Because it’s not the cyber-attack itself that’s shutting-down so many small businesses. It’s the cost of recovering from one.
Just working out how the heck the hack happened can run into thousands of dollars. But the expenses don’t stop there.
There’s the cost of data recovery and getting your website and systems up and running again; the PR you’ll need to restore your reputation; the revenue you’ll lose if the attack stopped you doing business; and the expense of telling your customers and employees.
Worse, if there’s a lawsuit against your firm because you lost client’s data, you’ll be footing the bill for legal fees and compensation,too.
Cyber insurance covers these expenses, so you don’t have to. It means you can carry on doing business, knowing you’ll still have one.
Who needs cyber insurance?
Do you store clients’ data electronically? Use email? Have a website? Accept credit or debit cards?
If the answer’s yes to any of these questions, you probably need cyber insurance.
However, if you think your business is completely protected from those hateful hackers swarming cyberspace, and your firm and customers will be ok if your IT system’s compromised, that’s great!
What does cyber insurance cover?
Cyber policies vary. But coverage may include:
- The cost of investigating a data breach
- The cost of telling your customers
- Legal fees and compensation if you’re sued for losing someone’s data
- Defense costs if you face legal action by local, or federal, authorities
- Payment of government penalties or fines
- The cost of restoring data, systems and your website
- Income lost and extra expenses if a cyber-attack stopped you doing business
- Credit monitoring for customers whose sensitive, personal data has been stolen
What cyber insurance doesn’t cover
A cyber policy can’t stop your firm from being hacked.
So, until bullet-proof security software’s invented, you’re just dodging malicious missiles.
But what you can do is make sure you’ve got strong cyber defenses in place. Don’t make it easy for hackers to hack.
How much does cyber insurance cost?
Compared to what a data breach will cost you? Not very much.
Say you’re the victim of a hack attack for the first time.
200 records stored in a centralized system were stolen and used fraudulently. You report the breach immediately and tell your customers. They’re not happy and take out a class action lawsuit against you. On top of that, the state fines you for losing your clients’ confidential data.
Without cyber liability coverage you’ll have to find, roughly:
$138,000 for the breach to be investigated
$25,969 to tell your customers
$266 in fines and penalties
$602,069 class action lawsuit
That’s a total of $766,304**. Ouch.
The good news is liability insurance can cover all those costs for you.
Even better, it’s designed to fit a small business budget and you can build a cyber insurance package to suit your firm’s exact needs.
Is cyber insurance worth it?
We live in a digital world where data is high-value and no-one’s is safe.
Cyberspace is swarming with cybercriminals and they’re getting smarter. AI and machine learning are just the latest weapons in their arsenal.
You don’t even need to be specifically targeted to be a victim. Data breaches happen because your system’s been hacked, or someone in your firm’s been tricked into giving out confidential information (social engineering). Data can be hijacked via ransomware, or because an employee left a company laptop on a train.
If you lose contracts, invoices and personal data because of a breach, the impact on your cashflow may be enough to put you out of business.
So, is it worth it? We think so, yes.
*statistics – USLI (Federal Trade Commission Statement, March 2017).
** These figures are estimated. Actual figures will vary, depending on the circumstances of each, individual incident.
Image used under license from Shutterstock.