Q: Do I Need Insurance to Minimize Cyber Risk?
–Concerned Business Owner
A: Dear Concerned:
Companies of all sizes are experiencing major data breaches at a startling rate. Many businesses are fortifying their cybersecurity to reduce this vulnerability. Nevertheless, some companies need extra protection, especially those that hold particularly valuable or vulnerable assets. Cyber insurance can provide this added protection, but not all businesses will find it necessary. Here are a few pieces of information that should help you determine whether your business needs cyber insurance:
Cyber insurance can have two types of coverage: coverage for the company’s own losses and coverage for liabilities toward customers, other businesses, or regulatory bodies. Speak with us as your Creative Business Lawyer® to determine what type(s) your business needs.
Insurance premiums tend to fluctuate, and policy exclusions can vary quite a bit. That is why it is so important you first know what type of coverage you need before purchasing a policy. This will also help when it comes down to the premium, which may be negotiable based on your needs and your existing security best practices.
Contractors and vendors can pose a risk to your security. If you are going to have cyber insurance, make sure your contractors and vendors have some form of coverage as well.
Cyber insurance isn’t full coverage. You may be able to recover real losses after the breach, but cyber insurance can’t recover your customer base or industry reputation.
Cyber insurance is no substitute for strong cybersecurity practices. That being said, cyber insurance works best as a supplementary layer of protection from serious data breaches.
Without an optimized cyber insurance package, a security breach could cost you your business. Protecting your business from cyber risk could be as simple as sitting down with us to establish and periodically review an insurance policy that can provide your business the security it needs. And, as technology advances, the need for that security will grow.
A Creative Business Lawyer® can help you with all your planning needs. Contact a Creative Business Lawyer® for a review of your business today.