Across industry lines, organizations have become increasingly reliant on workplace technology to conduct key business operations. Whether it be for communication purposes, e-commerce, or data collection and storage, continued technological advancements have helped streamline a variety of organizational processes.
Nevertheless, utilizing such technology and digital practices within your workplace carries additional cyber exposures and liabilities. All it takes is a single security failing to cause large-scale damages, leaving your organization to deal with the costly ramifications that accompany a data breach. That’s why it’s crucial to secure adequate cyber insurance.
Specifically, having a cyber liability insurance policy in place can help protect your organization against financial losses that result from a data breach or other cyber incident. Cyber liability insurance typically includes the following types of coverage:
First-party coverage—This form of coverage can offer protection for any losses that your organization directly incurs from a cyber incident, including:
- The cost of replacing or restoring any lost, stolen or damaged electronic data
- Income losses and extra expenses that result from disrupted business operations
- Ransom payments from a cyber extortion incident
- The cost of notifying any parties affected by a cyber incident
- Reputation preservation expenses (e.g., any public relations efforts following a cyber incident)
Third-party coverage—This form of coverage can provide protection for claims made or legal action taken against your organization by any stakeholders that suffered losses due to your company’s security failings, including:
- Claims regarding negligent acts, errors or omissions that caused a cyber incident
- Legal investigation and defense costs that result from a cyber incident
- Regulatory fines or penalties due to noncompliance with data protection laws
Top Reasons to Secure Cyber Insurance
Many organizations incorrectly label cyber insurance as a luxury purchase rather than a necessity. In fact, a recent survey conducted by insurance experts found that nearly 60% of small and midsized companies don’t have any type of cyber insurance. What’s worse, less than 30% of those companies feel inclined to purchase a such a policy in the near future.
Despite these startling statistics, it’s vital for organizations of all sizes and sectors to secure adequate cyber insurance. Here’s why:
- You can’t afford a lack of protection. A single cyber incident can cost your organization millions of dollars in recovery expenses, business interruption costs and legal fees, which—without an insurance policy in place—could cause financial devastation.
- Cyber attacks are common. Don’t assume that cyber incidents are a rare occurrence. Especially as cyber criminals become increasingly sophisticated and organizations continue to digitize key business operations, data breaches have become a top threat—making cyber insurance all the more critical.
- Coverage is a contractual requirement. Many clients, vendors and suppliers include cyber insurance as a requirement in contractual agreements. In other words, securing cyber insurance is crucial to maintain your supply chain and ensure solid customer relationships.
- Noncompliance can be costly. In the event that you violate state, federal or international data protection laws, the resulting fines can be significant. Cyber insurance can assist you with these costs.
Don’t let your organization suffer the costly consequences of a data breach. Contact us today to secure a cyber liability insurance policy that meets your organization’s unique needs.
© 2020 Zywave, Inc.