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<p class="has-black-color has-text-color has-large-font-size">Cyber insurance can protect your business in case of a hack. You may be able to add it onto a business owner’s policy.</p>
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<p class="has-black-color has-text-color has-large-font-size"><strong>Nerdy takeaways</strong></p>
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<ul class="has-black-color has-text-color has-large-font-size"><li>You should have cybersecurity insurance if you handle customer data or store information about your business online.</li><li>Cybersecurity insurance can cover the cost of notifying your customers about a breach, legal defense and more.</li><li>Data breach insurance and cyber liability insurance are types of cybersecurity insurance.</li><li>You may be able to add some cyber coverage to your business owner’s policy.</li></ul>
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<p class="has-black-color has-text-color has-large-font-size">Cybersecurity insurance protects businesses against financial losses caused by incidents like data breaches and theft, system hacking, ransomware extortion payments and more. If your small business stores sensitive information online or on a computer, you should carry at least some cyber insurance coverage.&nbsp;</p>
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<p class="has-black-color has-text-color has-large-font-size">Some insurers offer cyber insurance as an add-on to a business owner’s policy, but you can also purchase this coverage separately. Here's what cybersecurity insurance covers and where you can buy a policy.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size">What are the types of cybersecurity coverage?</h2>
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<p class="has-black-color has-text-color has-large-font-size">Cybersecurity insurance generally comes as either first-party or liability coverage; these policies protect companies in different circumstances. If you’re a technology business, you’ll want to consider adding the different, but related, technology errors and omissions coverage, as well.</p>
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<h3 class="has-black-color has-text-color has-large-font-size"><strong>First-party coverage</strong></h3>
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<p class="has-black-color has-text-color has-large-font-size">First-party cybersecurity insurance covers the costs of things like:&nbsp;</p>
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<ul class="has-black-color has-text-color has-large-font-size"><li>Investigation of the incident.</li><li>Risk assessment of future cyber incidents.</li><li>Lost revenue due to business interruption.</li><li>Ransomware attack payments based on coverage limits.</li><li>Notifying customers about the cyber incident and providing them with anti-fraud services such as credit monitoring.</li></ul>
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<p class="has-black-color has-text-color has-large-font-size">The most common first-party cybersecurity coverage is data breach insurance.</p>
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<h3 class="has-black-color has-text-color has-large-font-size"><strong>Third-party or cyber liability coverage</strong></h3>
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<p class="has-black-color has-text-color has-large-font-size">Cyber liability coverage can protect your business if a third party sues you for damages as a result of a cybersecurity incident.</p>
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<p class="has-black-color has-text-color has-large-font-size">Cyber liability coverage generally pays for:</p>
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<ul class="has-black-color has-text-color has-large-font-size"><li>Attorney and court fees associated with legal proceedings.</li><li>Settlements and court judgments.</li><li>Regulatory fines for noncompliance.</li></ul>
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<p class="has-black-color has-text-color has-large-font-size">General liability insurance excludes coverage for data-breach-related liability claims, so if your business stores customer data, you’ll want to consider a separate cyber liability insurance policy. </p>
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<h3 class="has-black-color has-text-color has-large-font-size"><strong>Technology errors and omissions</strong></h3>
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<p class="has-black-color has-text-color has-large-font-size">A technology errors and omissions, or E&amp;O, policy kicks in if a cybersecurity incident occurs in a customer’s business because of an error on your part. You should consider buying this coverage if your business manufactures a technology product or provides technology services. </p>
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<p class="has-black-color has-text-color has-large-font-size">For example, if a customer’s financial data is stolen from your computer, first-party or liability insurance would provide coverage. However, if you write an accounting software program that has an error in the code and the customer’s data is stolen directly from their computer as a result, you’re now in tech E&amp;O territory.</p>
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<p class="has-black-color has-text-color has-large-font-size">Technology E&amp;O pays for items similar to that of cybersecurity liability insurance, such as legal fees, court costs, and judgments or settlements but only in covered circumstances relating to products or services.&nbsp;</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size"><strong>Which businesses need cybersecurity insurance?</strong></h2>
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<p class="has-black-color has-text-color has-large-font-size">Almost any business — no matter its size — can be at risk for cybercrime. But cybersecurity insurance is especially important for:</p>
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<ul class="has-black-color has-text-color has-large-font-size"><li><strong>Businesses that store important data online or on computers.</strong> If your business stores important data, such as phone numbers, credit card numbers or Social Security numbers — either online or on a computer — you are at risk of a cyberattack. You should consider data breach insurance. If you store sensitive customer data, consider cyber liability coverage, too.&nbsp;</li><li><strong>Businesses with large customer bases. </strong>Insurance can help cover certain regulatory fines these businesses might be subject to following a data breach. Notifying customers of data breaches is often required by state law, and first-party policies can cover this cost, which can be significant for companies with large consumer bases.</li><li><strong>Businesses with high revenue or valuable digital assets. </strong>The costs associated with cyber incidents can be difficult to predict, and larger companies are likely to have more valuable data, which could come with a more expensive ransom.&nbsp;</li></ul>
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<p class="has-black-color has-text-color has-large-font-size">If you are unsure whether you need cybersecurity insurance, consider speaking to a business insurance agent near you to assess your risk level and potential premiums to determine if it's the right investment for your company.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size"><strong>What does cybersecurity insurance exclude?</strong></h2>
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<p class="has-black-color has-text-color has-large-font-size">Cybersecurity insurance does not pay for the following:&nbsp;</p>
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<ul class="has-black-color has-text-color has-large-font-size"><li><strong>Property damage.</strong> Cybersecurity insurance generally doesn’t pay for any property damage stemming from a data breach or cyberattack, such as hardware that was fried during the cyber incident. These sorts of claims are usually covered by commercial property insurance.</li><li><strong>Intellectual property.</strong> During a cyber incident, intellectual property losses and any lost income associated with it are commonly excluded from cybersecurity insurance coverage. </li><li><strong>Crimes or self-inflicted cyber incidents.</strong> Virtually no cybersecurity policy is going to cover a business that is charged with committing a crime related to or causing a cyber incident. Commercial crime insurance generally covers theft by employees, though.</li><li><strong>Costs for proactive preventive measures.</strong> Protective measures to avoid a future cyberattack, like training employees on cybersecurity and setting up a virtual private network, probably won’t be covered by a cyber insurance policy. </li></ul>
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<h2 class="has-black-color has-text-color has-extra-large-font-size"><strong>How do I get cybersecurity insurance?</strong></h2>
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<p class="has-black-color has-text-color has-large-font-size">You can purchase cybersecurity insurance through most business insurance providers. </p>
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<p class="has-black-color has-text-color has-large-font-size">Many business insurance companies offer cybersecurity or data breach insurance as an add-on to their business owner’s policies, though this may not be enough coverage for businesses with more complex needs. </p>
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<p class="has-black-color has-text-color has-large-font-size">To get a sense of how much cybersecurity insurance is likely to cost for your business, get multiple business insurance quotes. You can do this in a few minutes from online business insurance companies or work with a business insurance agent, who can help you compare quotes and find the best coverage at the best price.</p>
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<p>To read the full article, <a href="https://www.nerdwallet.com/article/small-business/cybersecurity-insurance#:~:text=You%20should%20have%20cybersecurity%20insurance,are%20types%20of%20cybersecurity%20insurance.">click here.</a></p>
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