Cyber Liability Insurance: Do You Need it?

You protect your physical property, so why wouldn’t you want to protect your virtual property too? Your virtual property could contain confidential, financial, or personal identification information. Imagine if this type of information found itself in the wrong hands, and you were to blame? With the web working as the epicenter of business administration and activity, Cyber Liability Insurance is a necessity for today’s business owners.

The Computer Security Institute reported that 2 in 5 companies experienced a significant cyber attack in a recent 12-month period. This past summer, in fact, was considered the “Summer of Hackers,” as a recent Forbes article noted. And the U.S. Secret Service and Verizon Communications, Inc. identified that 72 percent of all data breaches occurred in small-to-medium sized businesses.

One would think that with these recent trends, business owners would be running to buy Cyber Liability Insurance the first chance they could. But, actually, this is not the case at all. According to the Chubb 2012 Public Company Risk Survey, only 35 percent of companies invest in Cyber Liability Insurance.

So why are so many companies avoiding Cyber Liability Insurance in their company safety plans and Liability Insurance policies? The recent Forbes article reveals that most business executives do not know enough about this type of insurance and are also hesitant because of the high premium costs. For example, many don’t realize that just as you can qualify for “good driver” discounts, your business can potentially obtain Cyber Liability Insurance for less by putting cyber security policies and practices in place.

Here are some of the steps your business can take to boost cyber security on its own before going to an insurance company:

  • Hide Wi-Fi networks and protect them with encrypted passwords that are changed regularly.
  • Ensure that firewalls, anti-virus/anti-spam software and other security programs are updated regularly.
  • Make sure all company mobile devices that have the potential to be lost or stolen are password-protected.
  • Create employee user accounts for accessing data; require that employees use strong, unique passwords that must be changed regularly.
  • Allow only designated individuals to download and install software on company computers and devices and ensure that downloads are coming from safe and secure sources.

For additional help on best cyber safety practices, see the Federal Communications Commission’s 10 Cybersecurity Tips.

Once your business has implemented its own cyber safeguards, start shopping for the right Cyber Liability Insurance for your company. Cyber Insurance, for example, can be purchased to cover third/first party liability, privacy, media/content, regulatory actions, business interruption, extortion/threat expenses, and more.

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Photo via Stuart Miles / FreeDigitalPhotos.net

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