Cyber liability insurance is a type of commercial insurance that provides financial protection and coverage for legal costs associated with cybercrime incidents. It is designed to safeguard businesses from the financial burdens resulting from data breaches and cyber-attacks. Cyber liability insurance typically covers the following expenses and recovery costs:
- Data breaches involving theft or loss of client information
- Breach of network security
- Costs of business interruption
- Forensic examination of breach origins or extent
- Costs of data recovery
- Online extortion
- Crisis management costs to mitigate damage to a company’s reputation caused by a cyber catastrophe
- Legal fees, including fines and penalties, resulting from third-party accusations of data or network security violations
The reliance on data is integral to the operations of nearly every business and connecting to the internet exposes companies to the risk of being hacked. The costs associated with repairing the damage and the legal expenses involved in a data breach can have a significant impact on an organization, as well as harm its reputation. This holds true whether a website is hijacked and defaced, or sensitive data and customer information are stolen.
In New Zealand, approximately 70% of SMEs have been affected by viruses, malware, and fraud, with over half experiencing IT security incidents at least once a year. The projected annual cost of cybercrime to New Zealand enterprises is estimated to be $650 million. Cyber liability insurance is specifically designed to protect businesses from the financial burden and legal expenses resulting from data breaches caused by hacking, as well as the theft or loss of client information.
Why Should My Company Consider Cyber Liability Insurance?
Cyber liability insurance for engineering consultants is essential for companies that rely on technology in their daily operations. Even simple activities such as sending emails or storing private customer information, and conducting financial transactions online can qualify for coverage. The potential consequences of a cybercrime incident can be disastrous for small organizations, including the loss of crucial client data, business information, and degraded network performance. Not only can cybercrime have a severe financial impact, but it can also damage a company’s reputation within the community.
For New Zealand SMEs, cyber liability insurance offers much-needed security and peace of mind. It protects businesses from risks such as data breaches, system outages, hacking, and theft.
What Does Cyber Liability Insurance Include?
Cyber liability insurance typically includes coverage for the following:
- Investigation and data recovery costs
- Costs of business interruption
- Penalties and fines
- Extortion expenses
- Public relations and crisis management expenses
- Hacked and defaced website
- Computers infected with malware or viruses
- Data ransom
- Mistaken email attachments
- Stolen or lost devices
To protect your company, it is crucial to consider cyber liability insurance. While each business’s online presence and technology reliance may vary, a general rule of thumb is that if any aspect of your business operates online, you are exposed to the threat of cybercrime.
To further secure your online business, consider the following measures:
- Regularly review your IT security strategy
- Ensure malware, virus, and software security tools are up to date across all devices
- Maintain an IT register to track employee IT devices
- Establish a reliable IT infrastructure
- Have a plan in place to handle cyberattack incidents
- Provide ongoing cyber training to employees to increase awareness and knowledge of online threats
FAQs About Cyber Insurance
What is the cost of a cyber liability insurance policy?
The cost of a cyber liability insurance policy is specific to each company’s circumstances and level of risk exposure. Factors that insurers consider when determining the cost of coverage include the type of business, claims history, and the number of employees.
Do I still need cyber liability insurance if my business doesn’t conduct any online transactions?
Even if your business doesn’t have a website, it is still important to consider cyber liability insurance. Many businesses utilize computers, local networks, and servers to store essential electronic documents and records. Additionally, conducting online business banking, such as sending and receiving invoices that may contain sensitive data, puts your information at risk in the event of a cybercrime incident.
Cyber threats can target businesses of all sizes and industries, and the potential consequences can be severe. Without adequate protection, your company may face financial losses, reputational damage, and legal liabilities. Cyber liability insurance provides a safety net by covering the costs associated with data breaches, cyber-attacks, and other cyber incidents.
To determine the right cyber liability insurance policy for your business, it is recommended to consult with an insurance professional who specializes in cyber risk management. They can assess your specific needs, evaluate potential risks, and help you select a policy that offers comprehensive coverage.
Investing in cyber liability insurance not only helps protect your business from financial and legal risks but also demonstrates your commitment to safeguarding sensitive data and providing a secure environment for your customers. In an increasingly digital world, proactive measures like cyber liability insurance are essential for the long-term success and resilience of your business.
Don’t wait until a cyber incident occurs. Take the necessary steps to secure your business and explore cyber liability insurance options to mitigate potential risks.