Summary: Cyber attacks are a constant threat for businesses, as is exemplified by the recent Colonial Pipeline attack. On top of cybersecurity measures, cyber insurance offers a way to protect your business if you are a victim of such an attack. But is cyber liability worth the cost? This article takes a closer look at the benefits of cyber liability insurance coverage.
Why Should Small Businesses Have Cyber Insurance Coverage?
The Colonial Pipeline, which operates 5,500 miles for a refined gasoline and jet fuel pipeline, was forced to shut down recently due to a ransomware attack. The pipeline, which carries 45% of fuel supplies for the eastern U.S., is the latest victim of a major cyber attack. This cyber breach is just one of the many incidents causing an over 122% increase in cyber attacks in just the first quarter of 2021. As cybercrime becomes more advanced every year, it’s more important than ever that small businesses understand how these types of attacks can impact their operations – and take the proper steps to protect themselves.
One type of protection is cyber insurance, or cyber liability insurance. This type of policy covers certain losses incurred as a result of data breaches. Attacks can vary from malicious assaults on a company’s physical servers to phishing scams that solicit sensitive data from individual users. Cyber insurance can protect your company from a range of cyber attacks, and AmTrust is committed to evolving our coverage as new cyber threats emerge for our customers.
Cost of a Data Breach
Sixty percent of small businesses that fall victim to a cyber attack go out of business in six months. This is especially true for companies that do not have a data breach response plan in place. The effects of cyber attacks can be long lasting, devastating and can lead to:
- Extra expenses to keep the business operating and to notify all parties involved of the breach
- Loss of income due to business being shut down from the cyber attack for any amount of time
- Time lost replacing damaged electronic data stored on computers
- Heavy fines from credit and debit card companies and other data protection sources if customers’ financial data is compromised
- Possible lawsuits due to stolen data and funds
- A damaged reputation, as customers may be hesitant to do business with a company, they may see as careless
- Decreased work productivity, which can ultimately impact the company’s bottom line
Data Breach Cost Data
The 2020 IBM and Ponemon Institute Cost of a Data Breach Report found that the average cost of a data breach was $3.86 million. Fifty-two percent of the data breaches were caused by a malicious attack. Stolen or compromised credentials and misconfigured cloud services rounds out the most frequent data breach threats.
In the data breaches the report studied, 80% of the most frequently compromised records were those involving personal identifiable information (PII). Also, having a remote workforce was found to increase the average total cost of a data breach by nearly $137,000, making the average total cost grow to $4 million.
Who Needs Cyber Insurance?
Businesses, both big and small, can be victims of a cyber attack. However, small businesses may be more vulnerable to a data breach due to a lack of necessary data security measures from internal sources (disgruntled employees, loss of laptops/phones, inadequate training, etc.) and external sources (malware/virus, phishing, keyloggers, and more).
A cyber liability insurance policy supports the business's efforts to recover in the event of a cyberattack. It will provide access to expert resources and financial support through investigation, notification, recovery and post-recovery activities related to a data breach event.
Benefits of Cyber Insurance
Premiums on a cyber insurance policy that's designed to support the business's unique risks and budget will cost a fraction of the amount the company could spend recovering from a cyber attack. Maintaining cyber liability insurance will help keep the business operational after an attack, and it demonstrates to the customers that their well-being and privacy is top of mind.
AmTrust’s Cyber Coverage
AmTrust offers a single policy solution specifically tailored to protect small businesses against cybersecurity and privacy breaches. AmTrustCyber's insuranceproduct provides low rates and specialized coverage to help businesses if they are victims of cyber attacks. The extent of cyber coverage will differ from business to business.
There is no application process for limits of $100,000 or below, but there is a limit of up to $1 million available with a completed application. To submit a cyber policy, AmTrust requires that it is written in conjunction with an AmTrust Package, Businessowners Policy or Workers' Compensation program.
Our cyber insurance works for businesses immediately in the event of a data breach. First-party response services include assistance at every stage of the investigation of, and response to, a breach incident from a team of technical professionals. Our coverage includes legal services to help companies comply with state regulations that require a business to notify customers of a data breach involving personally identifiable information.
AmTrust’s Cyber policy includes call center services for affected customers as well as public relations and crisis management expenses to help protect the business reputation of your client. Policies generally cover indemnification for legal fees and expenses, provide customer notifications in the event of a breach and include the option to monitor the information of anyone impacted for a specified period of time. Policies may also cover costs incurred in the recovery of compromised data or the repair of damaged computer systems. Other components of AmTrust’s cyber coverage includes:
Business Interruption Protection From a Cyber Attack
One of the most significant exposures companies face in the event of a breach is business interruption loss, including a loss of productivity due to an interruption or suspension of systems due to a cyber attack. AmTrustCyber's product is designed to pay for loss if the interruption or suspension is caused by the failure of the computer security to prevent the breach.
Website Media Content Liability
AmTrustCyber's policy also includes coverage for Website Media Content Liability, which helps address risks associated with violations of privacy, plagiarism or piracy, copyright and trademark infringement, alleged defamation, libel, or slander relating to a company’s website.
First Party Data Protection
The loss of customer lists, data and business plans due to a data breach can force a business to either close or start anew. AmTrustCyber's product is designed to reimburse the insured for costs incurred to restore data from backups or originals or gather, assemble, and recollect such data from other sources to the level or condition that existed prior to the breach.
Protect Your Small Business with Cyber Insurance from AmTrustCyber
AmTrust is committed to evolving our coverage as new cyber threats emerge for our customers. We offer cyber insurance to help protect small businesses from some of the costs associated with various cybersecurity attacks. To learn more about our coverage from AmTrustCyber, please contact us today.
This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.
