Your business needs cyber coverage to keep all its valuable data intact and prevent massive losses to your assets. Cybersecurity attacks are more than just an inconvenience, particularly for small businesses that cannot afford to invest in a robust cybersecurity program. Within six months of a cyberattack, 60% of small businesses must permanently close their doors. Cyber liability insurance is an essential safeguard for companies vulnerable to attacks.

Knowing what kind of cyber coverage fits your business best is a critical first step in securing your company against computer-based crime.

Three Types of Cyber Coverage

Cybersecurity insurance policies are typically available as first-party or liability coverage, used for protection in varying circumstances. Technology businesses should consider adding technology errors and omissions coverage.

First-Party Coverage

First-party cyber liability insurance pays for expenses caused by a data breach or cyber attack on a company’s system. This type of policy generally covers the following types of issues:

• Incident investigation
• Fraud notification, including credit monitoring and anti-fraud services for affected customers
• Ransomware payments
• Revenue loss
• Risk assessment

Third-Party Liability Coverage

Third-party cyber liability insurance takes care of companies that do not prevent a cyberattack at a client’s business. Industries that deal with proprietary information or sensitive client data, including healthcare companies, financial institutions, tech companies, and online retailers, are particularly vulnerable to cyber liability lawsuits that can devastate their businesses. These policies will typically cover the following:

• Attorney and associated legal fees
• Court judgments and settlements
• Noncompliance fines

Technology Errors and Omissions Coverage

Technology companies can benefit from E&O policies, which protect against mistakes or failures of products or services that impact customers or clients. For example, if someone steals customer data from a company’s network, first or third-party liability insurance would cover the losses from the theft. However, if one could trace the data theft to a coding error made by the company’s technology department, a technology E&O cyber liability insurance policy would pay for the costs incurred by the mistake. 

Who Needs Cyber Liability Insurance?

Any business, regardless of size, can be a victim of cybercrime. Once you have established your level of vulnerability, you can work on finding cyber coverage for your business. Certain types of companies have an enhanced need for cyber liability insurance. If you meet the following criteria, you should prioritize obtaining a cyber policy.

• You store critical data on computers. If your company electronically stores data such as credit card numbers, phone numbers, or Social Security numbers, you are at an increased risk of cyberattack.
• You have high revenue levels. Because cybercrime can be expensive and risky, high-yield businesses with a high-dollar value that can result in expensive ransom payments are prime targets.
• You have a large customer base. State and federal regulations require customer communication and remedies following a data breach, which can be costly and time-consuming if you have many customers. Insurance is valuable for businesses with a large clientele to cover regulatory fines and defray the cost of customer care following a cyberattack.

About Haughn & Associates

Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.