This relatively new insurance product has been created in response to the growing threat to all businesses who have an online presence or store personal data.
There have been many recent high-profile cases of data breaches suffered by large companies, leading to a misconception that SME businesses are not a target of cyber criminals. The truth is quite the opposite. In fact, smaller businesses are perceived to be an “easy” target by hackers, who can infiltrate systems to embed viruses, steal data, deny access and hold businesses to ransom.
A UK government report states that over 60 per cent of small businesses have suffered a data breach in the past year. The subsequent average cost to an SME is between £35,000 and £65,000.
Cyber liability insurance policies can provide both first party and third party liability cover. The increasing cyber and data threats to businesses exist not only from external means but also from within.
Internal risks include the electronic transmission of a virus to a third party through an email, dishonest behaviour from an employee (i.e. passing customer data to a third party) or perhaps a simple moment of forgetfulness such as leaving a lap-top on a train.
What protection can I expect from Cyber insurance?
- Data breach – support including forensic investigations, rectification costs and legal advice
- Hacker damage – covering the costs of repairing or replacing systems damaged by hackers
- Privacy protection – costs and penalties (where legally insurable) incurred for failing to keep customers’ personal data secure
- Data extortion – protection against ransom demands from criminals
- Notification costs – help in notifying customers (data subjects) and regulators following a breach
- Third party liability – consequent liability to third parties including costs incurred for the unintentional transmission of a virus
- Cyber business interruption – compensation for loss of income, increased costs and damage to reputation
- Intellectual properties – cover for infringement of copyright through online activities
- Telephone phreaking – covering compensation in the event that your telephone system is victim to hacking, which may result in expensive call charges
- Defamation – accidental libel caused through an electronic communication
- Credit checking – costs for monitoring data subjects following a breach