Do I Need Cybersecurity Insurance for My Small Business?
Consider Target, JP Morgan, Sony, and Anthem Blue Cross. If these corporations can get hacked, so can your small business. So what can you do about it?
Obviously, prevention is key. But more and more businesses are also looking at post-hacking relief and finding it in the form of cybersecurity insurance. So is it time for your small business to get a cybersecurity insurance policy?
The Threat Is Real
The Sony cyber attack cost the company a reported $141 million. The Target hack cost $148 million. Not only are these kinds of data breaches common, but the cost of business interruption and network damage can be astronomical, which is why the Department of Homeland Security is nurturing the nascent cybersecurity insurance market.
According to the DHS, cybersecurity insurance can help thwart cyber attacks by: "(1) promoting the adoption of preventative measures in return for more coverage; and (2) encouraging the implementation of best practices by basing premiums on an insured's level of self-protection." Still, companies must weigh the cost of cybersecurity insurance plans against the relative risk of being hacked.
Is the Coverage Necessary?
If you do any business online or have social media accounts, business data breaches and customer identification thefts can happen. There are ways for small businesses to protect against cyber attacks, but all the preparation in the world may not be successful. A cybersecurity insurance policy can include:
- Security audits to protect against hacks
- Customer credit monitoring services in case of customer ID theft
- Investigative expenses to determine who was responsible for an attack
- Criminal reward funds
While damage such as a loss of customers, reputational damage, lawsuits, and loss of valuable intellectual property are always possible, cybersecurity insurance can help you prepare for an attack and pay for one, if necessary.
You may want to check with your small business insurance provider to see if they offer a cybersecurity insurance policy. If not, you might need to purchase a standalone policy to cover hacks and data thefts. You may also want to contact an experienced business and commercial attorney to help assess your risk and make sure the coverage is right for your small business.
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Related Resources:
- Browse Business & Commercial Lawyers by Location (FindLaw Directory)
- As Data Breaches Continue, CyberSecurity Insurance Growing Too (Thomson Reuters)
- 5 First Steps to Take If Your Business Gets Hacked (FindLaw's Free Enterprise)
- Stop Twitter Hacking: Tips for Small Businesses (FindLaw's Free Enterprise)