Cybercrime is an increasing concern for businesses, with incidents and financial damages on the rise and no sign of slowing. In 2022, the FBI recorded 800,944 complaints related to cybercrime. Predictions estimate a breach of 33 billion accounts in 2023, with an attack occurring approximately every 39 seconds. Costs related to cybercrime could hit $10.5 trillion by the year 2025. Cyber liability insurance is crucial to protect businesses from financial losses associated with cybercrime. The following suggestions show how to choose the right cyber liability policy.
Determine the Need for Cyber Liability Insurance
Before purchasing cyber liability insurance, you must identify the unique risks that your company faces. Depending on your industry, your business may be subject to theft of sensitive information, disruption of critical operations, or interruption of physical services through network attacks. Depending on the needs of your individual company, you can purchase the type of coverage that benefits you and decline what you don’t need. Your business is a good candidate for a cyber liability policy if any of the following are true:
- You have a large consumer base
- You have valuable digital assets
- Your business has a high valuation or revenue stream
- You store sensitive or valuable data on computers or online
Evaluate Existing Coverage
Before you purchase a cyber liability policy, you should completely understand your existing coverage. The first- and third-party insurance policies may already provide a base level of protection against cyber risks. Understanding these specifics will enable you to purchase what you need and save money on what you don’t.
Estimate Needed Limits
When determining the type and amount of cyber liability insurance needed, it’s essential to have a good grasp on the limits that could arise. Compare the potential losses resulting from a data breach with the available liability limits and costs. You should attempt to structure your policy to cover the anticipated level of loss while maintaining a healthy balance of policy premiums.
Consider Deductibles
A cyber liability insurance policy will require the company to pay a deductible for each loss. While lower deductibles are helpful in the event of a loss, they also cause premiums to increase. There should be some consideration of risk levels, corporate assets, and history of cyber-attacks when determining deductible levels.
Determine the Type of Cyber Liability Insurance Needed
There are several options to consider when determining the type of cyber liability insurance needed. Consider your specific corporate risks and needs when examining the following types of coverage.
Third-Party Coverage
Cyber liability coverage is beneficial if your business faces a lawsuit due to damages resulting from a cybersecurity issue. This insurance typically covers the following:
- Attorney fees and court fees stemming from lawsuits
- Fines for noncompliance
- Court judgment and settlement costs
Technology E&O
A technology errors and omissions policy will cover damages from a cybersecurity incident that results from your company’s error. It is beneficial for companies responsible for manufacturing technology or providing technology services.
Conclusion
Cyber liability insurance is more than just a safeguard against potential financial losses; it represents a proactive commitment to secure and protect the business’s digital assets, reputation, and customer trust. As the threat landscape evolves, businesses must adapt and fortify their defenses, and a robust cyber liability insurance policy is an integral part of this defense strategy.
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.
