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Is Cyber Insurance Essential for My Business?

By April 14, 2022April 20th, 2023Business Insurance
Cyber Insurance

In today’s marketplace, most successful businesses have some type of online presence. The number of online transactions continues to rise each year. The wealth of data enhances the customer experience, measures employee productivity, and stimulates business development. However, cybercriminals have also taken note of the increased online activity. This has led to increased cybercrimes, making cyber insurance important for businesses in today’s climate.

Research shows that data breaches have impacted both large and small businesses. As a business owner, you may be alarmed by the trends. To help protect against future incidents, businesses are adding cyber security insurance.

What Is Cyber Insurance?

The structure of most commercial insurance policies was developed before the current age of technology. While commercial insurance policies helps protect businesses against liability issues and property damage, they were not designed to help protect businesses against data breaches. As data breaches started to occur more frequently, insurers started adding cyber coverage into policies and offering singular cyber insurance.

Cyber insurance helps protect businesses against potential data breaches, phishing scams, and ransomware attacks. The insurance is available as first and third-party coverage. First-party coverage helps protect your business against potential losses resulting from a data breach. Third-party coverage provides liability coverage if a data breach causes hackers to gain control of your client’s sensitive information, such as credit card numbers or social security numbers.

Is Cyber Insurance a Worthwhile Investment? 

Many small businesses may be unable to purchase cyber insurance out of concern for the premiums. However, managing risks will lower premiums over the long run. Purchasing cyber insurance can prevent you from paying thousands of dollars in a lawsuit because of a data breach. Your entire business could be at risk. If you have already added cyber insurance, it’s recommended that you speak with your insurer to assess your coverage as your business evolves. Be aware that the cyber insurance market will continue to change over time. Insurance companies may start holding businesses accountable for establishing security guidelines before offering coverage. In some cases, insurers may ask businesses to obtain specific certifications.

Things to Consider

While demand for cyber insurance is high, a shift has made finding coverage more difficult, which has caused policies to become more expensive. Because cyber insurance is relatively young, insurers don’t have a lot of data to measure for calculating premiums. Hackers are also consistently developing new ways to attack. More businesses are left vulnerable as the attacks continue to become more sophisticated. Insurers want to avoid taking on too much risk, so many businesses are being audited or asked to provide detailed information before offering a quote.

Consult with Unisource Insurance Associates

If you are researching cyber insurance for business, it’s important to assess your current safety features. If you can establish strong safety measures, you reduce the chances of suffering a data breach while simultaneously lowering your premium. If you have any questions about cyber coverage, contact us today. At Unisource Insurance Associates, our team of professionals will assist you in creating a customized cyber insurance plan.