Cybersecurity insurance is an important part of expenses for businesses of any size. With the rise of cyber-attacks and data breaches, it’s critical to have a security system in place to protect your business from the financial and reputational damage that can result from a cyber incident.
Thank you for reading this post, don't forget to subscribe!The question I hear daily: “Is cybersecurity insurance worth the investment for my business? C’mon, I’m not a big enough target Benny!” The short answer I tell most of my clients is yes. The long answer is, it depends on the specific needs and risks of your business. But one thing is certain, having a security system in place IS crucial.
First, let’s take a look at the risks. Cyber attacks and data breaches are becoming more and more common. In fact, according to a study by Hiscox, 60% of small businesses have experienced a cyber attack in the past year. Maybe you’ve even had an attack, and the unfortunate truth is the cost of a data breach can be shockingly overwhelming. In an instance we worked through with a client, the cost for remediation was over six figures, this doesn’t include the lost faith from their clients. The average cost of a data breach for a small business is $200,000.
Take a second, I know you don’t think it will happen, but just imagine if your business were to experience a data breach. Not only would you have to deal with the immediate aftermath, such as notifying your customers and fixing the security vulnerability, but you also have to deal with the long-term repercussions, such as a loss of customers and damage to your reputation. Listen, I’ve seen it happen.
That’s where cybersecurity insurance comes into play. Cybersecurity insurance can help cover the costs associated with a data breach, such as the cost of hiring a forensic investigator, notifying customers, and providing credit monitoring services. It can also help cover the costs of any legal fees or settlements that may result from a breach. Simply having a cybersecurity policy, it can provide you peace of mind and financial protection for your business in the event the unthinkable happens.
A key point to note, it’s important you realize that cybersecurity insurance is not a substitute for having a security system in place. I REPEAT – NOT A SUBSTITUTE! In fact, many insurance providers will require that your business meets its requirements and have certain security measures in place before they will provide coverage. This can include things like firewalls, intrusion detection systems, and employee training on cybersecurity best practices.
It’s also important, to be honest and transparent when applying for cybersecurity insurance. Failing to disclose certain aspects of your business or security measures can lead to a claim being denied. So, it’s important to have a clear understanding of the security measures and vulnerabilities that exist within your business before applying for coverage.
So, should your business purchase cybersecurity insurance? The answer is that it depends on the specific needs and risks of your business. But, it’s important to consider the potential financial and reputational damage that can result from a cyber incident and to have a security system in place to protect your business.
Cybersecurity insurance is an important consideration for businesses of all sizes. With the rising threat of cyber-attacks and data breaches, it’s crucial to have a security system in place to protect your business from the financial and reputational damage that can result from a cyber incident. However, it is important to note that having a security system in place is mandatory and that being honest in the application process is critical to have a claim accepted.