Cyber Liability Insurance in West Michigan
Key Points
- The threat landscape is constantly changing, so your organization needs to be prepared for the latest threats.
- Cyber liability insurance can help mitigate a data breach’s financial impact.
- Cyber liability insurance can be the difference between a data breach being a minor setback or a major catastrophe.
It’s no secret that the internet has changed our business. From how we communicate with customers to storing sensitive data, nearly everything about the modern workplace has shifted to a digital platform. While this connectivity has helped streamline many business processes, it has left organizations vulnerable to several cyber threats.
A Clark School study at the University of Maryland found that a cyber attack occurs every 39 seconds, proving that no business is safe from this growing threat. According to reports, 76 percent of organizations faced at least one cyberattack in 2021. On average, 36 percent of the data that businesses lost during the attacks could not be recovered. 51 percent of organizations reported outages that were caused by the attacks.
Given the numbers, it’s clear that every business in West Michigan needs to be prepared for a potential cyberattack. It’s only a matter of time before your organization is targeted. This can be troublesome for business leaders as one data breach can cause irreparable damage to your reputation and bottom line. Even organizations implementing the best cybersecurity practices can still be at risk. No system is perfect, and there will always be gaps in your defenses. That’s where cyber liability insurance comes in.
What is Cyber Liability Insurance?
Cyber liability insurance is “health insurance” for your business in case of a data breach or cyberattack. It’s designed to protect your organization from the financial burden of managing a data breach.
According to Nationwide, cyber liability insurance helps protect your business from a data breach involving customers’ confidential information, such as their credit card numbers, Social Security numbers, and health records. Without cyber liability insurance, your business would be responsible for 100 percent of the damages.
What Does Cyber Liability Insurance Cover?
Any West Michigan business or organization that stores, processes, or transmits sensitive data is at risk of a data breach. A cyber liability insurance policy can help cover the costs of recovering from a data breach. Cyber liability insurance is typically separated into two main coverage types: first-party and third-party.
First-Party Coverage
First-party coverage helps cover the costs that your business incurs due to a data breach. This can include notifying customers of the breach, providing credit monitoring services, and hiring a public relations firm to help manage the aftermath.
- The cost of investigating a data breach: Once a data breach is discovered, you’ll need to hire a third party to help investigate the cause and determine what information was accessed.
- Notifying customers of the breach: You may be required to notify customers of a data breach, which can be costly.
- Providing credit monitoring services: In the event of a data breach, you may be required to provide credit monitoring services to affected customers.
- Providing identity theft protection services: You may be required to provide identity theft protection services to affected customers.
- Reputational damage: A data breach can cause irreparable damage to your business’s reputation. While reputational damage can be challenging to quantify, it can still significantly impact your bottom line. Cyber liability insurance can help cover the costs associated with repairing your reputation.
Third-Party Coverage
Third-party coverage helps cover the costs of lawsuits or other claims filed due to a data breach.
- Legal Fees: If your business is sued due to a data breach, you’ll need to hire an attorney to defend your organization.
- Settlements: If your business is found at fault for a data breach, you may be required to pay a settlement.
- Judgments: If your business is found liable for a data breach, you may be required to pay a judgment.
Keeping Up With the Changing Threat Landscape
The threat landscape is constantly changing, so your organization needs to be prepared for the latest threats. The cyber insurance landscape has undergone an extensive transformation over the past few years in response to the ever-changing threat landscape. Cyber liability insurance policies are constantly evolving to meet the needs of businesses and organizations. Many insurance companies have placed more restrictions on coverage, while others have expanded their coverage to include more risks.
Many cyber insurance providers have implemented sublimits, limiting the coverage available for certain risks. For example, a sublimits might be placed on the available coverage for notifying customers of a data breach. Some insurers have also started excluding certain types of risks from their coverage. For example, some insurers will no longer provide coverage for data breaches resulting from employee negligence.
As the threat landscape changes, it’s essential to keep up with the latest changes in the insurance landscape. Cyber liability insurance is an important part of any risk management strategy, and it’s crucial to ensure that you have the right coverage for your organization.
Security Through Obscurity
Some businesses and organizations in West Michigan often think they can avoid being targeted by cybercriminals by keeping their data hidden or not storing sensitive data. However, this is no longer the case. In today’s interconnected world, it’s not enough to keep your data hidden. You need to take active steps to protect your data.
There are several steps you can take to protect your data, including:
- Encrypting your data: Encrypting your data makes it more difficult for cybercriminals to access sensitive information.
- Implementing security controls: Implementing security controls, such as firewalls and intrusion detection systems, can help protect your network from attacks.
- Training your employees: Training them on cybersecurity best practices can help them identify and avoid potential threats.
Cyber liability insurance is not a silver bullet but can help mitigate a data breach’s financial impact. By understanding cyber liability insurance and how it works, you can make an informed decision about whether or not it’s right for your organization.
If you have questions about cyber liability insurance or want to learn more about other insurance solutions, don’t hesitate to contact Envizion IT. We would be happy to help steer you in the right direction. With our comprehensive IT and security solutions, we can also help you protect your organization from the ever-changing threat landscape.
