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The Importance of Cyber Liability Insurance

By March 24, 2022No Comments

Odds are very high that you’ve been affected by cybersecurity failures and data breaches in the recent past. You only have to take a look at this list of breaches and ask yourself how many of these companies you did (or do!) business with:

  • Twitter: 330 million users compromised
  • Facebook: 5330 million users
  • LinkedIn: 700 million users
  • Yahoo: 3 billion accounts

Those are some of the largest businesses and most recognizable names in the past 20 years and yet they were not immune. The breach that in some ways is the worst, though, is that of First American Financial Corp. 885 million clients’ data was exposed, including bank account records, social security numbers, and mortgage paperwork details.

The Risks

The average cost of a data breach in 2021 was $4.24 million, a number that accounts for various cost factors such as legal and regulatory fees, loss of social capital and customers, and reduced productivity from employees. If your company allows for remote work, the response time for detecting and containing breaches tends to be longer and the overall costs tend to be higher.

Maybe you looked at the list of breaches above and said, “Well, my company isn’t that big or recognizable, so we won’t be as big a target!” The reality, though, is that “security through obscurity” is only an illusion. It’s not a matter of “if” your company will suffer a data breach, but “when”…and how much will it cost? Organizations with fewer than 500 employees had a higher cost for data breaches than companies with 500 to 1000 employees.

Reports suggest that the hackers who are threatening your company are only getting smarter…and harder to detect! While cybersecurity firms have definitely made advances, a lot of the protections they produce are reactions to weaknesses hackers have found. A digital hole is patched, but the hackers have moved on to something else. They constantly test the maturity level of an organization’s security to see if they are an easy target or something that will take more time. Hackers commonly hide behind nation-states, where the likes of China and Russia are just the two largest suspects of state-sanctioned attacks.

Today’s internet services bring some amazing benefits to your personal life and business, allowing you to reach new potential clients through social media and e-commerce, as well as providing access to company data wherever you happen to be thanks to cloud storage. But those new connections also provide new avenues to the bad actors who are trying to compromise your data.

So What Can You Do?

If you’re using technology, you’re at risk, so you should be asking yourself, “What can I do to protect myself?” A two-pronged approach is needed. First, put a cyber security plan into place so you can better detect, manage, and mitigate your risk. Consult with a cyber security expert if you have questions.

Second, with the realization that breaches DO happen, you should seriously consider Cyber Liability Insurance. A Cyber Liability policy can be an affordable way to cover losses associated with reduced income due to a breach, the costs of recovering the data and repairing systems, as well as more extensive items like legal and regulatory expenses, or investigation fees.

Policies can also help protect you from the costs incurred when a virus is spread, a laptop is stolen, or unintentional acts or mistakes by an employee. Technology is only getting more widespread and more vital to the growth of your business, so Cyber Liability policies will be more important as time goes on.

If you need to consider a Cyber Liability policy for your business, call RSS Insurance today at 423-954-9100.