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Data Breaches Are Increasing The Need For Cyber Liability Insurance

Data breaches continue to dominate headlines around the world. In 2019, 88% of organizations worldwide experienced a type of spear-phishing. Also, according to Inc.com, 60% of small businesses fall within six months of experiencing a cyber attack.

Since cybercriminals are getting savvier and the average cost of data breaches is increasing, it's vital to know what measures to take to protect your business from experiencing such breaches. If you are a business owner, you need to consider getting cyber liability insurance. 

Cyber liability insurance is a must-have addition for businesses because it protects them from the high costs of a data breach. It also covers expenses such as credit monitoring, customer notification, fines, and legal fees.

In this article we've put together, we will cover crucial information you need to know to protect your company from a data breach, along with solid reasons why getting cyber liability insurance is a wise business decision.

Outcomes from a cybersecurity attack

Related: Cybersecurity Risk Management: A Complete Guide

The danger of data breaches

When cybercriminals successfully infiltrate the organization, they can get information like names, phone numbers, credit card data, addresses, driver's license numbers, health records, and even SSNs

Attacks can range from malicious assaults on your physical servers to phishing scams that solicit sensitive data from individual users. Cybercriminals may also use ransomware to block access to your software until you pay a sum of money.

Let's take a look at three exceptional data breaches cases. 

  1. In 2018, one of the most significant security breaches happened in India's national ID database Aadhaar, with over 1.1 billion records lost. Biometric information was leaked, such as iris and fingerprint scans, which could open bank accounts and deposit large amounts of money into other accounts, among other state services. 
  2. In 2014, the online platform Yahoo also appeared in the newspaper's headlines. Research estimates that at least half a billion accounts were compromised. 
  3. On November 30, 2018, Marriott International announced it had come under a cyber attack, which had compromised 500 million accounts. The data included names, addresses, phone numbers, payment information, and even passport numbers. There were approximately 9 million encrypted payment card numbers, of which 385,000 of them were still in use. Marriott International first learned of the breach on September 8. However, in November 2018, Marriott realized hackers had been in its system since July 2014

Are you looking for a team of IT professionals to help you deal with a recent security breach? Contact Systems X today to learn more about everything they can do to help you! 

Common ways cybercriminals penetrate the system and gain access to sensitive data is through:

  1. Leaving the "backdoor" open
  2. Malicious apps and websites
  3. Social engineering
  4. Phishing and spear phishing
  5. Computer worms
  6. Trojans
  7. Hacking
  8. Rootkits
  9. Identity theft
  10. Bugs
  11. Malware injection
  12. Ransomware
  13. Keyloggers
  14. Grayware
  15. Adware
  16. Spyware
  17. Bots
  18. Crimeware

Related: 5 Common Cyber threats To Watch Out For

As you can notice, the list is vast. For that reason, it's essential to learn how to prevent ransomware from entering your system. Additional problems of losing your sensitive information to hackers include:

  • Reputation damage
  • Financial loss
  • Downtime
  • Going bankrupt

What is cyber liability insurance?

Cyber liability coverage includes the cost for a company to recover from a data breach, cyberattack, or virus. It also covers legal claims emerging from the breach. It can pay for attorney's fees, fines, credit monitoring, and other costly expenses.

Getting reliable insurance is crucial as it ensures that you are financially secure in facing any problem you might encounter. Since it's impossible to avoid the spam risk of cybercriminals, buying cyber liability insurance is a wise business decision. 

Who uses cyber liability insurance?

Any company that stores sensitive data in the cloud or an electronic device should have cyber liability insurance. This includes everything from large organizations to sole proprietors. There is not a company too small or too big to not need cyber liability protection.

You will need Cyber Liability Insurance if your business does any of the following actions:

  • Use an electronic device to store data
  • Store customer information in general
  • Use a Point of Sale (POS) systems
  • Use a computer system to store data
  • Keep credit card information
  • Store medical information
  • Use a cloud system to store data

If you have questions or doubts about getting cyber security liability, you should contact a managed service provider like Systems X to help you make wise business decisions. However, the type of industries that must have cyber liability insurance are:

  • Healthcare facilities
  • Banks
  • Payment apps
  • Online retailers
  • Financial institutions (such as student loan offices)

According to the Economist, Americans spent 5% of their working time at home before the pandemic, and now it's approximately 60%. Since telecommuting is on the rise, it is essential that you have cyber liability insurance because people use their personal computers to enter their organization's portal, and hackers exploit this to implant malware. 

It's noteworthy to mention that although people are working longer hours, they are reporting higher happiness and productivity levels. As lockdowns lift, this working methodology from home is likely to stay because of the benefits of telecommuting. 

Cybersecurity Liability Insurance Explained

What does cyber liability insurance cover?

Cyber liability insurance can cover costs linked with data breaches and cyber attacks on your business. Those costs can include lost income due to a cyber event, expenses related to notifying customers affected by a breach, fees for recovering compromised data, costs for repairing damaged computer systems, and more.

Research done by the  IBM and the Ponemon Institute put the medium cost of a data breach at $3.86 million. Also, it takes about 280 days to identify and contain a breach. 

A cyber insurance policy can pay for:

  • Reputational damage. (You may need to hire a public relations firm to help handle any reputational damage.)
  • It covers the cost to replace electronic data, software, or programs destroyed or damaged.
  • Loss of income and extra expenses
  • It can cover a ransom paid to gain access to encrypted information.
  • The damage that cybercriminals did to the equipment
  • Mandatory notification of affected parties. (Not doing so could result in steep penalties and fines.)
  • Credit monitoring services for affected customers.
  • Fixing security flaws(such as outdated programs).

Related: 4 Cybersecurity Threats (+Solutions And Tips For Every Online User)

Reach out

Cyber liability insurance is still evolving. Insurance companies are relatively new to this space, so there isn't much clarity around what cyber liability insurance includes and doesn't. For this matter, it is essential to read through your entire policy before committing, preferably with the help of a broker or insurance expert.

With the right cyber liability insurance, you can dodge the losses and harm to your brand that can otherwise occur from a data breach.

Do you need help improving the security of your company? Visit Systems X to view their entire catalog of services or contact them to get professional assistance today!

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