Across the globe, a growing number of cyber threats are putting small and medium-sized businesses (SMBs) in danger. From ransomware to payment diversion fraud and malware, a cyber attack can be detrimental to SMBs with limited resources.
“Almost half (41%) of small businesses experienced a cyber attack in the past year, according to the Hiscox Cyber Readiness Report 2023,” said Mike Maletsky, VP and Product Head, Cyber and Technology, for Hiscox USA. “The most common type of attack was phishing, but hackers also gained entry through unpatched software and credential theft.”
With the proper training and steps toward prevention, you can reduce the risk of cyber attacks, but that doesn’t guarantee you won’t fall victim. Having cybersecurity insurance is the best way to protect your company from financial and operational ruin after a cyber invasion.
What is cybersecurity insurance?
Cybersecurity insurance, or cyber liability insurance, covers the costs and losses associated with cyber threats. These threats include cyber extortion and crime, breaches, and potential business interruptions. It also covers expenses related to data recovery, like the restoration, repair, or replacement of damaged data or software.
Most cybersecurity insurance providers offer first-party and third-party coverage. First-party coverage protects your business against cyberattacks, covering costs for lost data recovery and ceased operations. It also helps you cover expenses for recovery and forensic investigations to determine the cause of the attack.
Third-party coverage protects your business if it’s at fault for an attack by an external party. It covers the legal fees and damages incurred by others outside your business due to the attack.
Cybersecurity vs. cyber insurance
Cybersecurity insurance is a great step toward safeguarding your business from the effects of cyber threats. However, this coverage doesn’t protect you from attacks. Instead, it helps your business manage the legal and financial aftermath of an attack, covering associated costs and liabilities.
Cybersecurity, on the other hand, focuses on preventative measures. Strategies such as two-factor authentication and encryption can protect your business from malicious attacks in the first place.
What cybersecurity insurance covers (and what it doesn’t)
When exploring your options for cybersecurity insurance, it’s important to understand exactly how it protects your business and what your coverage doesn’t include.
A policy from a cybersecurity insurance provider like Hiscox can cover the following, either as part of a base policy or as add-on coverage:
- Data breaches. Insurance covers costs incurred for things like breach identification and notification, paying for credit protection and crisis management services.
- Cyber extortion. Insurance protects businesses from the costs associated with cybercriminals’ ransom demands.
- Service disruptions. Cyber disruptions that impact network-dependent systems and lead to lost income are covered to ensure your business maintains its revenue.
- Data retrieval. This covers the cost of recovering, restoring, or replacing lost data or software impacted by cyber attacks.
- Information security. Insurance may cover legal defense and claim resolution costs if your business is accused of mishandling certain personal or confidential information.
- Cyber crime. This covers financial loss from cyber fraud, including funds transfers and social engineering.
- Digital media. Legal claims, including defamation or copyright infringement, against the content you share online may be covered by your insurance policy.
Cybersecurity insurance typically does not cover these items:
- Criminal proceedings. This includes criminal prosecution claims like grand jury proceedings or criminal investigations.
- Transfer of funds. There’s no coverage for lost, stolen, or transferred funds other than what is included above.
- Impacted infrastructure. Claims of interrupted or failed infrastructure, such as a loss of power, don’t qualify.
- Deliberate wrongdoings. Intentionally fraudulent or dishonest acts by the business or employees are not covered.
- Prior knowledge. If you already knew about a threat before you purchased your policy, the claim won’t be covered.
“Cybersecurity insurance can seem complicated, but business owners don’t have to be experts in it,” said Maletsky. “Go to a company like Hiscox — we are experts in business insurance — or to an agent or broker experienced in commercial insurance to find out what you need.”
Almost half (41%) of small businesses experienced a cyber attack in the past year, according to the Hiscox Cyber Readiness Report 2023. The most common type of attack was phishing, but hackers also gained entry through unpatched software and credential theft.
Mike Maletsky, VP and Product Head, Cyber and Technology, Hiscox USA
Do you need cybersecurity insurance? 4 questions to ask yourself
Before shopping for a cybersecurity insurance policy, ask yourself these questions to determine your coverage needs.
1. Does my business operate partially or fully online?
If you conduct any business online, an attack could cause a total shutdown of your operations and put your company's sensitive data at risk.
2. Does my business accept any form of digital payments, including credit cards?
Should your business accept payments or capture sensitive data like credit card information, it’s your responsibility to protect all parties involved.
3. Do my employees and I access business data through computers and/or mobile devices?
The more access points to your business’s data, the greater the risk of unauthorized breaches. Consider how you and your employees access confidential information and evaluate the security of each entry point.
4. Do we collect or store any confidential customer information, including financial or medical data?
If your business collects and stores confidential information that could benefit malicious actors, it could make your business a target for cyber threats.
If you answered “yes” to any of these questions, your business should immediately look into cybersecurity insurance coverage.
“Cyber criminals are getting bolder all the time, and AI is helping them be more efficient,” said Maletsky. “It’s critical to protect your data — which could be your company’s biggest asset — from those who want to use it for malicious purposes. If you’re using computers in your business, look into cybersecurity insurance coverage.”
Why choose Hiscox for your cybersecurity insurance needs?
Insufficient cybersecurity insurance coverage (or not having any at all) could lead to trouble for your business in the event of a cyber incident. That’s why you should choose a provider that offers ample coverage to suit your company’s needs.
Coverage from Hiscox offers these benefits and more to protect your business:
- Individualized policies. Hiscox customizes your cybersecurity policy specifically to your business’s needs, offering tailored coverage options to protect your business in all the right areas in the event of a cyber threat.
- Affordable pricing. Hiscox cybersecurity insurance starts at just $30 a month, or about $1 a day.
- Bundle savings. With Hiscox, you can save up to 5% when you bundle your cybersecurity insurance coverage with another business insurance policy.
But the best reason to get coverage through Hiscox is its suite of preventative tools, resources, and free classes that help protect your business from cyberattacks before they happen. These preventative measures, combined with their team of data breach experts ready to assist if an attack occurs, offer the right support and expertise to safeguard your data from increasingly savvy malicious actors.
“You’re the expert on your business, but we’re the experts on business insurance, including cybersecurity insurance, and we want to protect the business you’ve worked so hard to build,” Maletsky said. “You can get a quote online to find out what you need and how much it will cost, or you can call us and speak to a licensed advisor, who can answer your questions so you can be confident that you’re protected.”
Get a quote for cybersecurity insurance from Hiscox today
Don’t delay protecting your business. Take preventative cybersecurity measures before it’s too late. Reach out to Hiscox for a free cybersecurity insurance quote tailored to your business so you can start protecting your business from the impact of cyber attacks.
