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The Importance of Cyber Insurance for Businesses of All Sizes

Tyler Vogelsberg • Jun 14, 2018
Cyber resources have revolutionised the way businesses in all sectors operate. Modern technology makes transactions, product fulfilment and even manufacturing more efficient and customisable than ever before.

However, digital technology, especially any gadget with an internet connection, can also make businesses vulnerable to new threats they haven't faced in the past. Unfortunately, these threats often evolve as quickly as the technology and information that they target!

While you may not be able to anticipate all the possible challenges surrounding the technological growth of your business, you can take steps to protect yourself, your investments, your employees and your customers.

In addition to security measures, you should consider a cyber insurance policy. In today's digital age, cyber insurance can provide critical protection to businesses of all shapes and sizes.

What Does Cyber Insurance Do for Businesses?

As the name suggests, cyber insurance is intended specifically to cover the potential costs of technology, data network and cyber communications liabilities. The exact cover depends on your specific policy, but options include insurance for:
  • Risk assessment reviews
  • Data theft or loss
  • Cyberterrorism
  • Legal issues, including the cost of notifying customers
  • Business interruption
  • Breach recovery measures, such as equipment repair and penalties
The type of coverage you may need also depends on the industry you work in and how much of your business you conduct online.

When Do Companies Need Cyber Insurance Coverage?

In the past, only large companies were considered desirable enough cyber targets to need specialised insurance. However, with many small businesses using cardswipe apps to process credit card transactions, cloud storage for customer data and so on, more companies than ever should consider this critical protection.

In fact, a 2017 report from Small Business Trends showed that almost 50% of current cyber attacks affect small businesses rather than their medium or large counterparts, perhaps because these companies tend to be easier targets.

Additionally, these attacks often have a devastating impact on small or newly established businesses, with 60% of these companies closing within half a year of an attack.

Insurance experts recommend that businesses of all sizes consider their cyber insurances options if they:
  • Accept online payments
  • Communicate about intellectual property or sensitive information using unencrypted web messaging systems
  • Have a public website
  • Store payroll, accounting or customer information online
  • Use webconnected registers
While a cyber insurance policy cannot replace your firewalls, encryption programs or IT team, this coverage can ensure that your company survives a technology-related breach or loss.

How Does Cyber Insurance Work With General Liability?

Some business owners acknowledge the potential of cyber threats but assume that their existing business liability insurance provides enough cover to protect their company from these risks. However, most general or public liability policies have little to no measures that apply to cyber threats.

You should discuss your existing coverage with an insurance broker and consider purchasing a cyber insurance policy to ensure your business is fully protected.

How Does Coverage Work With Third-Party Data Management?

While some business owners fail to purchase cyber insurance because they assume they are already covered by their other insurances, other owners mistakenly believe that because they do not handle data management themselves, they are not liable in the event of a breach or loss.

Unfortunately, your company is considered responsible for vetting your information and technology partners. If your customer's private or financial data is compromised, you can be held liable for the full cost unless you have appropriate insurances.

For professional and friendly advice, based on the unique needs of your business, trust the team at Westralian Insurance. Call us now on (08) 9302 1388 or submit an enquiry form here.

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