Is Cyber Insurance Necessary for Small Businesses?
Small businesses are more often than not cost-conscious, and for good reason, since you’ve worked hard to bring your company to where it is now! However, small business owners also typically ignore a vital component of long-term success — cyber security – while focusing more heavily on developing their organisation and producing money.
All it takes is one successful cyber-attack to wreak severe harm to your company. With advancements in hacking, malware, and social engineering tactics, cyber dangers are getting increasingly complex, and the need for cyber liability insurance is now more critical than ever before.
Even though reputable business insurance brokers have sold cyber liability insurance to businesses since 2000, many companies don’t even know this type of insurance exists, or some may feel like it is an unnecessary expense.
But the reality is every small business will be affected by some form of cyber threat, so it’s important to understand just how necessary cyber insurance is for small businesses in Australia!
What is Cyber Insurance?
Cyber insurance is meant to protect your company from a variety of internet-based dangers as well as risks associated with information technology infrastructure and operations. Cybercrime has become increasingly common as we’ve progressed into a digital world, even though it was practically unheard of 20 years ago.
How Would Cyber Insurance Help My Business?
As a small business in 2022, you almost certainly rely on information technology (IT) infrastructure. If your IT equipment or systems fail or are disrupted, you will be exposed to the risks of business disruption, income loss, damage management and repair, and perhaps reputational harm.
While some aspects of existing insurance policies, such as commercial property, business interruption, or professional indemnity insurance, may cover cyber risks. Businesses are increasingly purchasing specialised cyber insurance policies to supplement their existing insurance arrangements, particularly if they:
- Rely largely on IT systems and websites to conduct their business process payment card information
- Retain sensitive customer details such as names and addresses
- Store their banking information rely heavily on IT systems and websites to conduct their business
How Can a Cyber Criminal Infiltrate My Company?
Cybercriminals utilise malware and viruses, computer and network hacking, denial of service assaults, social engineering, and online frauds to conduct their crimes. It can be quite easy for cyber thieves to get access to machines and networks that are not effectively protected by virus protection or passwords.
While a corporation can put numerous safeguards to secure their organisation, human error is responsible for a considerable proportion of cyber disasters. Cyber thieves may gain unrestricted access to your data and infrastructure by making simple mistakes like clicking on a link or reading a bad email.
Furthermore, malicious emails are more common in small organisations than bigger businesses. For example, cash transfer fraud, or a fake request for an employee to pay funds to a scammer’s bank account, is becoming a significant danger for SMEs. Such damages may be covered depending on the Cyber Insurance coverage purchased.
A security breach might compromise your company’s essential data, resulting in financial loss, reputational harm, and third-party responsibility. In addition, cyber-attacks may be costly, with the average cost of a cyber-attack on a small to medium-sized organisation being estimated at $1.9 million.
Besides, a cyber event does not have to be complicated; it might be as easy as having your phone stolen, sending the wrong file in an email, or clicking a harmful link in an email.
Why are Small Businesses Most at Risk to Cybercriminals?
Small businesses are seen as easy prey since they are more vulnerable to identity theft than bigger corporations because they have fewer protection measures. For example, in the case of a cyberattack, cyber liability insurance coverage supplements and supports the company’s attempts to recover. In addition, it will give professional resources as well as financial assistance during the investigation, notification, recovery, and post-recovery phases of a data breach.
What Exactly Does Cyber Insurance Cover?
Cyber insurance covers the damage to or loss of information from IT systems and networks. When faced with reputational harm or regulatory prosecution, policies often entail extensive support with handling the issue itself.
Cyber insurance can make the recovery process as quick and straightforward as possible if you have a cyber breach. However, it is still likely to take a number of days or weeks, depending on the severity of the incident.
At the very least, cyber liability insurance enables businesses to comply with state rules requiring them to notify consumers of data breaches containing personally identifiable information. In addition, policies can cover:
- Legal fees and expenses are covered under indemnification.
- Many insurers offer technical support with breach management as part of the insurance coverage; if this is the case, contact them as soon as the breach is found.
- Option to keep track of the details of everyone who has been impacted for a set length of time.
- Costs associated with recovering data that has been compromised.
- Repair costs for computer systems that have been damaged.
Does Business Insurance Cover Cyber Attacks?
Liability coverage and property damage are the two main components of business insurance. For example, there would have to be tangible property damage for an occurrence to be covered under the Property part of a Business Insurance policy.
As a result, while the insurance may cover physical damage, it may not cover your data, network infrastructure, or other damages resulting from a cyber assault. Furthermore, both liability and property insurance policies are likely to include extensive exclusions in the event of data corruption, deletion, theft, or incapacity to use.
Ready to Secure Your Business with Cyber Insurance? Reach Out to a Business Insurance Broker Now!
A well-thought-out risk management strategy, as well as a plan for responding to a cyber-attack, may go a long way towards keeping your company and consumers secure. However, if an attack or breach occurs, Cyber Liability insurance may be able to assist you in keeping your firm up and running while also compensating your consumers if necessary.
Cyber risk might feel daunting, with new data protection regulations and new ways of cyber assault. This is why many Australians go to a reputable business insurance broker who can help you through the process, discuss the growing cyber dangers, what you require from your cyber security insurance policy and how insurance may assist you in reducing your risk.
While a business owner can buy cyber insurance directly from an insurer, a mortgage broker will be able to get you a better deal. Business insurance brokers understand the needs of everyday Australian businesses and have access to multiple coverage options so we can tailor the policy to suit your needs best.
Business insurance brokers are focused on providing innovative solutions that help protect their clients against financial damage. For example, when working with a reputable mortgage broker, you are guaranteed to secure affordable, effective cyber liability insurance!