How To Protect Your Business from Cyber Threats with Insurance
Your bank is calling with a fraud alert. Your friends are sending you texts asking if you’ve been hacked because they are getting strange messages from you. An angry customer is on line 1 because they are being charged for something they didn’t buy. It’s one of the worst possible scenarios in today’s world – experiencing a cyber security breach.
Modern businesses need coverage options designed to safeguard against modern risks, such as cybercrime and data breaches. Cyber liability insurance is an evolution of traditional business coverage that helps you mitigate the impact of digital threats. Working in the digital world is unavoidable for today’s businesses, but the right coverage from Freeway Insurance can help you avoid some of the most common cyber risks.
What Is Cyber Liability Insurance and Why Does Your Business Need It?
Cyber liability insurance is a subset of business insurance that covers company losses associated with cybersecurity issues. Protecting your business from cyber threats is essential in today’s digital economy, and cybersecurity insurance is one of the best ways you can safeguard your company.
How Cyberattacks Can Affect Your Business
Cybersecurity incidents can have a massive impact on your company’s finances and reputation. The average cost of a major data breach was $4.88 million in 2024, which can seriously impact a business’s ability to operate. This is especially true for small businesses, which could be financially devastated by an attack if they don’t have the right small business insurance.
Along with direct losses from cyberattacks, phishing, and hacking, companies also must spend money on notifying customers of a breach, restoring their digital systems, setting up new security measures, recovering company data, and more.
Additionally, having a cybersecurity incident can cause your customers to lose trust in your company and decide to take their business elsewhere, especially if you handle a breach poorly. This can lead to significant long-term losses. Having the right coverage will help you build trust with your customers and ensure that you can handle any cybersecurity issues appropriately.
The Rising Threat of Data Breaches and Cybercrime
Cyberattacks are only becoming more of an issue as businesses increasingly rely on digital tools, such as cloud databases. While these digital systems are essential for participating in the modern economy and keeping up with competitors, they do have vulnerabilities.
Cybercriminals often target businesses by exploiting these vulnerabilities to steal their valuable data, such as login credentials and private customer information. As cybersecurity systems become more advanced, so do cybercriminals, resulting in highly sophisticated attacks that can cost tens of millions of dollars.
What Does Cyber Liability Insurance Cover?
Cyber liability insurance covers expenses and damages associated with cyberattacks, digital crime, and other cybersecurity issues. These plans are specialized types of business insurance, and you can customize your coverage based on which specific risks are most relevant to your company. They help you pay for damages you owe to your customers if their data is compromised while under your care, alongside other costs you might incur after a cyberattack.
Protecting Your Business from Hacking and Data Breaches
Your liability coverage is an important safeguard against losses from hacking and breaches. It can help replace lost income, help you update and repair your systems, and conduct forensic investigations to learn more about potential vulnerabilities after an attack.
Coverage for Legal Fees and Notification Costs After a Breach
Notifying and compensating your customers is one of the most expensive parts of a breach. During the aftermath of a data breach, you’ll need to reach out to your customers to alert them of the situation so they can lock down their data, freeze their credit, and avoid identity theft. You may also have to deal with lawsuits from customers who were impacted by the breach. Your policy can offer coverage for both situations, ensuring you can support your customers and uphold your responsibility over their data.
How To Protect Your Business from Cyber Threats — Beyond Insurance
Insurance is essential for recovering from cyberattacks, but you also need to be proactive about preventing breaches in the first place. Along with signing up for comprehensive business insurance that covers small business cybersecurity issues, it’s important to follow best practices for protecting your data, avoiding breaches, and upholding the security of your digital systems.
Cybersecurity Best Practices for Businesses
Setting up standard procedures for digital systems is one of the best ways to avoid cyberattacks. Make sure your teams follow industry best practices such as setting up strong passwords, regularly changing login information, backing up your data, limiting access to essential employees, and only working from secure devices and networks. You should also maintain your software and hardware tools and conduct regular updates to patch vulnerabilities and improve security systems.
Training Employees to Recognize Threats
Human error can be a significant contributing factor to cybercrime. Criminals rely on confused or uninformed employees to carry out phishing scams and social engineering attacks, ultimately tricking them into revealing sensitive data. It’s essential to conduct thorough cybersecurity training sessions so employees can identify suspicious behavior.
How To Choose the Right Cyber Liability Insurance for Your Business
The policy you choose could have a major impact on your company’s ability to recover from a cybersecurity incident. Picking a reliable provider with the right protections is the best way to set yourself up for success.
Key Factors to Consider When Choosing Coverage
When selecting a plan, you want to balance your risk level with your coverage needs. Some companies have access to more sensitive data than others, putting them at greater risk. Consider what kind of cyber threats are most applicable to your company to make sure you’re getting the right level of support without overinflating your premiums.
The Importance of Understanding Your Policy Terms
When shopping for providers, make sure your insurer covers losses due to cybersecurity issues. Many companies include cyber liability coverage in their policies, but others may exclude certain kinds of breaches and issues. Thoroughly review your policy terms and ask about amendments to ensure you’re fully protected.
Get Business Insurance from Freeway and Protect Your Business from Cyberattacks
Securing business cyber insurance is one more way you can evolve your processes to keep up with modern risks. Expanding your coverage to include cybersecurity incidents will help you avoid losses, maintain trust with your customers, and successfully overcome breaches of any size.
At Freeway, our business coverage protects you from the most common threats to your business, including cybersecurity issues. Whether you’re recovering from a breach or dealing with legal challenges, our team will be there to help you mitigate damages and recoup your losses. Connect with the Freeway team by calling 800-777-5620, stopping by a Freeway Insurance office near you, or getting a free quote online to bolster your cybersecurity safeguards today.
FAQs
Learn more about cyber coverage and how it works by checking out these FAQs:
How Much Does Cyber Insurance Typically Cost?
Cyber insurance for data breaches is typically part of larger business insurance plans, so costs can vary widely depending on the details of your specific plan. Your digital risk levels, the type of data you oversee, what kind of systems you use, and coverage limits will all have an impact on your monthly premium.
Is Cyber Liability Insurance Required for My Business?
In some situations, you may be required to have general business liability insurance, which can cover certain cybersecurity incidents depending on your policy terms. Specific cyber insurance plans aren’t a legal requirement, but they’re still important for any business. Without coverage, you could open yourself up to lawsuits related to data loss, along with serious interruptions to your operations due to cybersecurity issues.
Can I Add Cyber Liability Insurance to My Current Business Policy?
Depending on your carrier, you should be able to add cyber coverage to your current business policy. Certain insurers may not have specific policies for cyber insurance, so be sure to discuss your needs with your agent to set up a plan that works for you.
