
As the world becomes increasingly digitized and connected, cyber threats will continue to grow in number and severity. In fact, according to some experts, businesses will lose more than £50 billion annually by 2023 due to cyber attacks.
Whilst no business is immune to being hacked, small to medium sized businesses are particularly affected because they often have limited resources and smaller security teams than larger corporations. Small businesses also have less cash reserves to cover potential losses from a cyber attack. So, to help protect your business against the risks of cyber attacks without breaking the bank, consider getting cyber insurance as part of your risk management plan.
Read on to learn more about what cyber insurance is, why you need it as an SMB owner, and how it differs from other types of insurance like general liability or property insurance.
Cyber insurance is a type of commercial insurance designed to cover a business’s losses due to cyberattacks, data breaches, and other computer-related risks. It generally does not cover software or hardware failures, theft, or employee negligence.
Cyber insurance also varies by provider, so make sure to choose a policy that best meets your needs. Some companies may offer “all-risk” policies, which means they’ll cover any type of loss or damage that occurs due to a cyber breach. Other policies are “named perils” policies, which means they only cover losses due to specified events.
Typically, cyber insurance policies are named perils policies.
According to figures released in 2022, 68% of small UK businesses said they didn’t have any cyber insurance cover at all. However, a single data breach can destroy a company overnight so whilst it may seem like an unnecessary expense for your small business, it’s actually essential to your financial security.
Cyber attacks can cause massive disruptions to your operation, including loss of critical data, identity fraud for customers and employees, and a temporary or permanent shutdown of your business. When a cyber attack occurs, you may need to pay for expenses like hiring a forensic team to investigate the breach, hiring third-party contractors to repair the damage, or paying for the cost of credit monitoring services for your customers, whose data may have been stolen. Cyber insurance can help cover these unexpected costs, which may be so high as to put the very survival of your business into doubt.
As with other types of business insurance, each cyber policy has different terms and exclusions that are important to understand before purchasing a policy. Some of the most important terms to understand include:
There are several different types of cover available for cyber insurance. Below are a few of the most common types of cover available, as well as examples of how they would apply to small businesses:
It can be especially expensive if you wait until a cyber attack happens before you buy a policy!
However: every business is different so the only way to get an accurate costing is to get a quote from a cyber security insurance specialist. You may also want to check with your current business insurance provider to see if they offer cyber insurance as an add-on cover.
Keep in mind that cyber insurance policies are relatively new, so it’s important to shop around and compare policies from multiple providers. You may also want to consider hiring a professional to help you understand the different policies and find the best one for your business.
Although you can't eliminate the risk of cyber attacks entirely, you can take steps to reduce it. Below are some tips on how to protect your business from cyber attacks.
As the world becomes increasingly more digitized, cyber threats will continue to grow in number and severity, and they are already one of the biggest threats facing businesses today.
Thankfully, there is a way to protect your company against these threats: cyber insurance. Cyber insurance can help you recover from data breaches, extortion attempts, and other cyber-related losses.
However, remember that no business is immune to being hacked. By dealing with an experienced insurer, educating your employees, and keeping your business's software up to date, you can reduce your risk of being hacked and, if a cyber attack does occur, be prepared to respond.