In 2021, small and mid-sized business owners attacked by cybercriminals spent an average of over $25,000 to clean up and repair the damage.There is, however, a way to ensure your business is covered in the event of cyber attacks, data breaches, and other digital disasters, and it comes in the form of a cyber insurance policy.
In this article, we’ll discuss what should be on your cyber insurance coverage checklist, and how to meet the cyber insurance coverage policy requirements.
What is Cyber Insurance Coverage?
Cyber insurance coverage is a form of insurance that business owners can purchase to cover the cost of a cyber attack. Cyber insurance policies work similarly to standard general liability insurance each of us has on our cars, homes and other valuable assets.
In general, cyber insurance can protect your business from different types of cybercrimes, such as:
- Litigation fees
- Data breaches
- Cyber extortion
- Business interruptions
- Damages to computer systems
- Ransomware or malware attacks
- Crisis management and PR expenses
- Fines and penalties from regulatory bodies
It’s important to note that no two cyber insurance policies are alike. Policies can vary greatly, and not all are suitable for every business. That’s why it is vital to explore your options before settling on a cyber insurance plan.
Cyber Insurance Coverage Policy Requirements for SMBs
As discussed earlier, a cyber insurance policy should reflect the unique risks and needs of your business. What may be best for one company may introduce unnecessary costs or risks to another.
When shopping for a cyber insurance policy, it’s important to understand your business’s unique coverage needs and budget expectations.
A checklist that helps you assess your cyber security risk level, budget, and coverage level options is a great start toward choosing the right policy for your business.
Cyber Insurance Coverage Checklist: The Four Key Steps
Step 1: Know Your Business’s Cyber Risk Level
Your cyber risk assessment should include identifying the types of data your organization collects and stores, as well as detailing any potential cyber threats.
Some factors that can affect your current cyber risk level include:
- Size of business
- How employees access sensitive data
- Level of internal training in cybersecurity
- Type of industry
Enlisting the help of experienced cyber security professionals will help you understand your company’s security strengths and weak points.
Step 2: Understand Your Regulatory Obligations
Businesses are responsible for protecting sensitive, personal information such as credit card information, home addresses, phone numbers, and health care data.
Businesses that are not compliant with these regulations may not qualify for cyber insurance or may void policy coverage in the event of a cyberattack.
If you’re unsure if your business complies with federal or state privacy laws, try speaking to an IT specialist.
Step 3: Establish a Cybersecurity Plan
A cybersecurity plan is a framework that covers your organization’s cybersecurity goals, establishes what resources you’ll use, and how to meet compliance requirements.
This plan should be regularly reviewed and updated to ensure that it meets the needs of your business’s ever-changing risk level.
Step 4: Determine Your Budget
When setting a budget for cyber insurance coverage, ensure you’re factoring in both short-term and long-term costs. This includes costs for an incident response team, reputation repair and recovery, crisis management, and data restoration initiatives.
The best way to determine your business’s cyber insurance coverage budget is to work with your finance department and a trusted cyber insurance broker.
Step 5: Ask Potential Brokers About Coverage
Before you commit to a cyber insurance policy, ask your potential insurance broker as many questions as possible. Examples of questions to ask include:
- Does this cover extend to a third-party security breach?
- Will this policy cover emerging security threats, such as social engineering events?
- How will this policy address reputational damage?
- What is the excess or deductible on the policy?
- Is there a type of cybercrime excluded from the policy?
- Can employee cybersecurity education lower the policy’s premiums?
- Does the policy cover breaches that originate from an employee’s personal device?
- What’s the claims process, and how long will it take to receive a payout?
- How much does the policy cost?
- What is the incident response time?
4 Common Cyber Insurance Coverage Mistakes to Avoid
- Not knowing what your policy will not cover. Be sure to ask your insurance broker what situations and damages the policy will not cover before committing.
- Not updating your policy regularly. Cybercrime is constantly evolving and your policy may not cover incidents resulting from new and emerging hacker strategies. Review and update your policy at least once a year.
- Not getting multiple quotes. As with all contracts and business expenditures, acquire a minimum of three quotes before selecting a cyber insurance policy.
- Not getting enough coverage. Don’t just get the bare minimum if you can afford a little more. Investing in a comprehensive insurance policy now can save you thousands of dollars in the event your business is hacked.
Why Is Cybercrime on the Rise in America’s SMB Sector?
Cybercrime is prevalent in every business sector across North America; even Chicago’s O’Hare and Midway airports have been victims of cybercrime.
However, small business owners are preferred targets for cybercriminals. This is largely due to one painfully obvious reason: it’s just easy for them.
How do we know? Consider the following facts from this study conducted in 2020:
- 20% of SMBs rely on zero cyber security endpoints
- One in three SMBs rely on free cybersecurity options
- 43% of SMBs have no cybersecurity defense plan in place.
Small business is leaving key digital doors open for cybercriminals to stroll through without anyone at the helm even noticing.
The message is clear: SMBs must take cybercrime risks more seriously and take the necessary steps to protect their digital assets and client information. That’s why having cyber insurance coverage is essential.
Safeguard Your Small Business Against Cybercrime
In order to meet the cyber insurance coverage policy requirements and avoid falling victim to cybercrime, business owners should consult with a trustworthy managed services provider (MSP) that specializes in cybersecurity.
An MSP can help you assess your company’s risk management strategy and develop a comprehensive plan to meet your needs and budget.
When looking for an MSP, it is vital to ensure that they can provide you with:
- Breach detection
- Extensive logging
- Threat monitoring
- Intrusion monitoring
- Breach alert protocols
- Advanced malware protection
Is Cybersecurity Enough?
Despite a cybersecurity team’s best efforts, breaches and data leaks can still happen. Hackers are resourceful and creative, and are constantly creating new ways to access valuable data and information.
Even with the best security protocols, businesses can still fall victim to cyber attacks. Adding an additional layer of protection in the form of a cyber liability insurance policy is a sure way to protect your business from the damaging costs of malicious attacks.
Develop a Cyber Insurance Coverage Checklist With XL.net
Safeguarding your digital assets requires a team with the right experience to protect your business from hacking attempts and data breaches.
At XL.net, we can help businesses in Chicago and beyond develop and implement cyber and network security plans to keep hackers out to ensure your company remains in good standing.
If you’re considering cyber insurance coverage or need help with meeting cyber insurance coverage policy requirements, we are ready to assist you. Our experienced team of cyber security professionals can advise you on how to choose a policy that aligns with your needs.
For more information about our cybersecurity services and how we can help you find a cyber insurance policy, contact us today.