Why small businesses should consider cyber insurance | Truist (2024)

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Why small businesses should consider cyber insurance | Truist? ›

This specialized insurance coverage helps businesses reduce the risk of major loss after an event caused by hackers, human error, or technical failure leading to security lapses. Cyber insurance policies can help manage a variety of threats, including: Cyber extortion and ransom demands.

From defraying costs following a potential incident to indemnification for legal fees, small business cyber insurance helps ensure protection against events like data breaches of client information and ransomware attacks.

Your small business may be at risk for cyber attacks that can cause damage in many ways, including: Identity Theft. Business Interruption. Reputation Damage.

A cyber insurance policy helps an organization pay for any financial losses they may incur in the event of a cyberattack or data breach. It also helps them cover any costs related to the remediation process, such as paying for the investigation, crisis communication, legal services, and refunds to customers.

How much does cyber insurance typically cost? For small businesses, annual cyber insurance premiums can range from $1,000 to $7,500. This range is dependent on several factors, which we discuss below. A recent survey found that the majority of cyber insurance underwriters expect rates to increase slightly in 2024.

Due to the potential financial costs associated with data breaches and losses, small businesses should place a premium on data protection. A company's reputation may suffer if it fails to safeguard its confidential data and permits data breaches.

As a general rule, you should insure against things you wouldn't be able to pay for on your own. This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.

Any business that stores or processes sensitive information should consider cyber liability insurance. Consider coverage if you store data such as customer names and addresses, Social Security numbers, medical records, and financial information such as credit card information.

Loss of value through intellectual property (IP) theft

Often, they won't recognize IP theft until long after an incident (for example, when a competitor takes a new product to market). Nevertheless, devaluation due to IP theft is a loss most cyber policies don't cover.

Cyber insurance, also known as cyber risk insurance or cyber liability insurance coverage, is designed to help an organization mitigate exposure through risk transfer by offsetting any costs associated with data recovery after a cyber-related incident.

Does my company need cyber liability insurance? ›

Cyber liability insurance coverage is important for any size business to have. At a minimum, cyber liability insurance helps companies comply with state regulations that require a business to notify customers of a data breach involving personally identifiable information.

In December 2023, insurance giant Aviva found that just 17% of small businesses have cyber insurance.

Small businesses with effective security programs allocate around 10% to 20% of their total IT budget to cybersecurity measures. With a similar budget, you can support a wide range of cybersecurity activities, including: Cybersecurity awareness training.

Whether a company is thinking of adopting cloud computing or just using email and maintaining a website, cybersecurity should be a part of the plan. Theft of digital information has become the most commonly reported fraud, surpassing physical theft.

It's recommended that every online retailer obtain both general liability insurance and product liability insurance, and that may be enough to cover your ecommerce business. However, some ecommerce retailers like to have more protection.

With the escalating frequency and severity of cyber attacks, all businesses, regardless of size or industry, should consider adding cyber insurance coverage to mitigate financial losses stemming from cyber incidents like data breaches, ransomware attacks, and network outages.

A cyber-attack can do more than just cost your business money - it can also damage your reputation. Cyber liability insurance can provide the resources you need to repair your company's image after an attack. This could include public relations services, crisis management support, and other reputation management tools.