4 Reasons for Purchasing Cyber Liability Insurance Coverage

Data modern day is not recorded in physical files or kept inside a locker of a highly guarded facility; rather it is stored on computers and on clouds that can be successfully cracked by a person residing in another continent. If a company’s electronic network comes under attack, a business not only faces the risk of losing sensitive information (like customer’s credit card numbers) to skilled hackers but also the risk of losing its customers by losing their trust and its reputation as a consequence. All this is harmful for the company’s profitability. Cyber Liability Insurance is a stand-alone policy that is designed to protect businesses against such attacks and the cost and penalties incurred during the whole process.

Penalties and Investigation Costs

If the data related to the credit information of your customers is lost to a hacker then in that case your business could be facing severe penalties by law enforcing authorities. Under the agreement of merchant services, a business would be responsible for paying the investigation cost, reassurance cost of credit card and the fraud carried out on stolen credit cards. These costs can reach thousands of dollars even for a small and medium sized business. Cyber Liability Insurance covers you against those penalties and costs.

Cost of Rebuilding Reputation

A company’s reputation is its most valuable asset. A breach of a company’s electronic network can harm its reputation which may result in decreased sales. Insurance covers the cost of hiring a PR firm to restore the company’s image in the minds of customers and also compensates the firm for the loss that the company has faced because of a cyber attack.

Risk Management Services

Big business firms already have a risk department that works on reducing the risks faced by the business, so that the probability of such an event can be reduced. But small and medium sized businesses mostly do not have a proper risk management team. By purchasing Cyber Liability Insurance, your IT related risks would be assessed by your insurer in order to accurately price the policy. This assessment report can also shed light on how you can better manage your cyber related risks without really having an in-house risk management department.

Compensation for Interruption Caused by Cyber Attacks

You may be thinking that a cyber attack may temporarily halted your business activity, so it would be covered by Business Interruption Insurance policy; however a Business Interruption Insurance only covers your business when a damage to physical property occurs. In case of damage to your networking systems, the Business Interruption Insurance will not cover you. Cyber Liability Insurance needs to be purchased in order to be compensated for the income lost due to cyber attack.