Risk & Insurance
The Importance of Cyber Insurance for Businesses
Since the pandemic, the shift toward digital operations in the business world has become a vital evolution. However, with the many benefits of a connected, online enterprise comes a slew of risks that traditional insurance packages, such as Business Owner’s Policy (BOP) Coverage Insurance, may not address. This gap has led to the increasing importance of Cyber Insurance for businesses, and it’s time you find an insurance broker who understands this is a crucial aspect of modern insurance coverage.
Why Is Cyber Insurance Important?
A 2022 Official Cybercrime Report by Cybersecurity Ventures predicted the global annual cost of cybercrime would reach $8 trillion in 2023—an amount greater than the annual GDP of every nation on Earth, barring China and the United States. And the cost of cybercrime isn’t expected to slow down, with damages projected to reach $10.5 trillion by 2025. Along with significant financial losses, businesses of all sizes may suffer reputational harm and lawsuits from affected customers.
How Misconceptions About BOPs Can Affect Insurance Brokers
Many businesses erroneously think that cyber threats are already covered under their BOP. But what does a Business Owner’s Policy cover? Typically, BOP Coverage Insurance addresses property damage, liability, and other conventional business risks. Cyber threats often fall outside this umbrella.
The Real Cost of a Cyberattack
The real cost of a cyberattack might surprise you. While CNBC reports the average cost of a cyberattack is $200,000, Business.com says the average cost of a data breach to a small business ranges from $120,000 to $1.24 million. Whatever the number, these can feel like abstract stats that don’t really apply to your business.
So, here are a few real claims examples we know of that might bring it closer to home:
- An online retailer went offline for six hours due to a cyberattack on the data center that hosted their site. The cost of recovering the website, lost revenue, and incident response expenses was $144,000.
- A public relations firm was hacked, and its system was infected with malware. IT forensics, legal, and notification costs were $50,000.
- A law firm had $118,830 fraudulently transferred overseas by cybercriminals posing as the firm’s bank.
- An employee in a manufacturing company clicked on a malicious link in an email, infecting the system with malware and encrypting all data. Incident response and recovery costs totaled $60,000.
Fortunately, all the above had cyber liability insurance so those costs and losses were covered. But without a policy, each company here would have been responsible for every dollar.
Is Your Company Covered For A Cyberattack?
Cybersecurity has now become a necessity for every business that uses technology. Could your company afford to pay the above costs or lose revenue due to downtime while you figure out how to respond to a cyberattack? With cyber liability insurance, you wouldn’t have to.