Bosworth & Associates 1818 W SW Loop 323 Tyler, TX 75701

What Does Cyber Security Insurance Cover, and Do I Need It?

July 24, 2023

Technology is evolving at a rapid pace, and it’s crucial that your business keeps up with the trends. While that used to mean having a website and a presence on social media, today, there’s a lot more to it.

In our technological-global world, most business is conducted online in one capacity or another. This means your business is responsible for the storage and protection of sensitive data and the personal information of your customers.

Bosworth Insurance, an experienced local insurance provider in Tyler, Texas, has watched the cyber world evolve and seen how cybercrimes have continued to grow in sophistication and scope. With that growth comes the need to protect yourself, your business, your employees, and your clients.

Over 50% of small businesses have been victims of data breaches, and the majority of them multiple times.

Not only can this be potentially expensive for your computer system: In addition, a cyber-attack can injure your business in numerous ways by impacting your relationship with your clients. If they don’t feel like they can trust you with their information, they’re less likely to do business with you. And not just clients—also employees are at risk.

Which is where cyber security insurance comes in.

What is Cyber Security?

Most people are familiar with the standard types of insurance, such as health insurance, car insurance, and other general insurance policies. These policies are there to protect you, your family, and others in the event unexpected things happen.

But what about the less physical world that exists mostly online? Because of its relatively new status, many people are unsure as to what cyber security insurance covers and why they might need it.

“Isn’t it covered under my general liability insurance?” is a common question. Because of being relatively new to the insurance world, cyber liability insurance isn’t covered under general liability and must be purchased separately.

The purpose of cyber security insurance is to cover the liability of your business in the unfortunate event a cyber breach of your company’s data does occur. Which in today’s world happens too frequently. Despite all the technology evolving to keep up with the threats, those seeking to do harm are often one step ahead.

When this happens, both employee and customer information is at risk. For example, credit card information, social security numbers, driver’s license information, health records, and more.

How Cyber Security Protect Can Your Business

Cyber security insurance doesn’t just provide coverage to help with the financial burdens and legal fees associated with a cyber security breach. Depending on the policy, it can also help with assisting in alerting customers about the breach in their data, restoring data that’s been compromised, helping customers whose identity has been compromised, and assisting with the costs associated with legal defense.
Depending on what type of business you own, you’ll want to contact your insurance provider and discuss the cyber security insurance that’s the best fit for your company’s needs.

If you choose first-party coverage, you’ll have insurance coverage for such issues as the lost revenue from any time your business had to stop and you were no longer making money.

Getting to the bottom of an attack on your cyber security can be a time-consuming, messy, and, most importantly, expensive endeavor. First-party cyber insurance helps cover those costs.

Cyber security liability assists in identifying and notifying customers of the cyber breach and helping to cover anti-fraud and other similar services.

If you decide on third-party coverage, you’ll be covering your bases in the event an injured third party decides to sue your business for damages. In this case, it covers whatever legal fees are incurred, the judgment or settlements, etc.

Which Businesses Need Cyber Security Insurance?

The short answer: if you’re doing business online, it’s a good idea to contact your local insurance provider and ask about cyber liability coverage.

Many small businesses aren’t even aware that they’re at risk until it’s too late. Even if you’re a small business, you should have cyber liability to help cover your business in the event of a security breach. Your policy will cover everything from fines to notifying customers to legal fees. A small business is particularly susceptible because often their cyber security isn’t as tight as it should be, and/or they don’t feel they could become a target and let their guard down.

The gist is that if you are a business, large or small, you should invest in a cyber security insurance policy.

It’s also important to know what cybersecurity insurance doesn’t cover.

Cyber liability doesn’t cover physical damage to property (such as hardware) that was compromised or destroyed during the cyber-attack.
However, ask your insurance agent if your commercial property insurance policy covers this type of property damage. Some do, and it never hurts to ask.

If you suffered a loss of income from intellectual property loss, that’s generally not covered in your cyber liability policy.

The technological world is changing rapidly, and it’s important that your business keeps up with the times—and that your insurance keeps up too.
Contact your trusted insurance company today and find out what cyber security insurance is right for you and your business.

Bosworth & Associates has been selected for the 19th year as a Best Practices agency.