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What is Cyber Liability Insurance & Why Companies Need it

Did you know that the average cost of a data breach for a public trading company is $116 million?

Technology is a business tool that you can no longer ignore, and it has made a lot of aspects of your company easier to handle. With those benefits, however, come plenty of risks.

Cyber attacks threaten to damage your firm’s reputation and finances, and one way to lessen the harm is by having cyber liability insurance. This article will explore the cyber liability insurance definition and why your company needs it.

What is Cyber Liability Insurance?

Cyber liability insurance provides coverage for issues and financial repercussions that result from data breaches or cyber-related events. The insurance policy usually includes first-party and third-party coverages.

First-party coverage offers financial compensation and support when your company is the one that was targeted by a data breach.

This includes direct financial losses, the investigation and legal costs, and the costs incurred when you notify customers that their information was compromised.

On the other hand, third-party cyber liability coverage includes coverage for data breaches of other companies or parties that affect you.

Why Does Your Company Need Cyber Liability Insurance?

Cyber breaches can seriously harm your firm, in more ways than one. These are the main reasons and scenarios that display why your company will need cyber liability insurance.

1. Your Company Relies on Technology

Can you imagine continuing with your business processes and dealings without computers or technology? If the answer is no, then you need cyber liability insurance.

By an act as simple as using the Internet – perhaps to send an email, or perhaps you have a business site where you process orders – you can put yourself at risk of hacking.

Despite your best prevention methods, such as using stronger passwords or continuously updating your software, it only takes one thing to go wrong for everything to fall apart. If your company relies on technology, being safe is better than being sorry.

2. Your Company Handles Sensitive Client Information

If your company deals with sensitive personal information from your customers, such as their credit card details, addresses, and more, a cyber attack will heavily impact you.

If a hacker gains access to these details, it can cause more attacks that will jeopardize your clients.

It opens you up to the possibility of lawsuits from customers who believe you didn’t incorporate the necessary protection procedures when dealing with their information.

When clients entrust you with sensitive information, you are responsible for making sure that you minimize risks as much as possible. This includes having cyber liability insurance.

Even without a lawsuit, the cost of a cyber attack can already be quite significant.

If you have to deal with a legal dispute, this will damage your company’s finances even more. Not to mention, the hit to your reputation may result in the loss of future clients.

While cyber liability insurance cannot reverse the tide and prevent a cyber attack from happening, the insurance coverage allows you to recover client data and compensate their losses accordingly.

3. You Cannot Survive a Financial Attack on Your Company

If you believe that your company cannot maintain your finances in the event of a cyber-attack, you will need cyber liability insurance. The costs of a cyber event can seriously harm your finances, both directly and indirectly.

You will have to face additional costs such as installing new protection software for your computers, having to face operational delays, engaging in a lawsuit filed by a client, and the costs of having to recover lost data.

If you have cyber liability insurance, the coverage will provide you with some financial support during this period of time, enabling you to continue financing your business operations even when faced with a devastating attack.

When you’re not certain your company can survive a financial attack, having cyber liability insurance is a necessity, not a choice.

4. Cyber Liability Insurance Protects Your Reputation

Imagine a scenario where you inform a client of a data breach that jeopardizes their personal information, and, when asked, you admit you didn’t have cyber liability insurance.

The damage that this does to your reputation will result in significant financial losses in the future. Even more disastrous is if your client files a legal claim against you, and you don’t have the finances to defend yourself in court.

Having cyber liability insurance doesn’t just protect your finances – it safeguards your professional reputation, too.

By being able to compensate for the loss your clients face and pay for the necessary legal defenses, you can still salvage your reputation in the case of a cyber hit that affects your clients.

This also ensures future clients that you have the necessary safeguards to make sure that their information is safe or will be recovered in the case of an attack.

Cyber Liability Insurance for Companies

Many consider that only larger businesses are at risk of cyberattacks, but the truth is, a lot of small businesses in the United States have experienced data breaches. This means that every business should consider having cyber liability insurance.

Cyber insurance coverage is important for firms who rely on technology, who handle sensitive information, and may be able to protect your finances and professional reputation.

The cyber liability insurance cost is worth it to reduce the consequences you have to face as a result of a breach.

Contact us today for cyber liability insurance coverage.