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Small Businesses and Cyber Insurance: What Cover Do You Need?

Cyber Insurance Small Business Insurance Business Interruption Insurance Health Insurance Retail and Consumer Insurance Professional Services Insurance Technology Sector Insurance Property and Construction Insurance Transport & Logistics Insurance Manufacturing Insurance Public Sector Insurance Medical and Care Services Insurance Education and Research Insurance

When it comes to crime, cyber or otherwise, many people prefer to adopt the belief that only other companies face those threats. And while it is in our nature to shield ourselves, overconfidence and unawareness give criminals an advantage.

It is vital to know that there are ways to protect your company and your customers. Enhanced security and in-depth employee training are necessary, but only cyber insurance can help you deal with the aftermath of a cyberattack.

What is Cyber Insurance?

Cover, known as cyber insurance, is a type of business insurance that will protect your company from damages caused by a cyberattack. Specific policies are different, but they cover computer invasions, malicious software distribution, unauthorized use of personal and financial information, modification of data, and damage to electronic communications.

If Cyber Insurance Does Not Prevent an Attack, Do I Need It?

The answer is a simple yes. Consider the fact that your health insurance will not prevent a ruptured appendix, but it is extremely helpful in paying for your medical care.

Cyber Insurance will help you deal with the terrible and expensive aftermath of a cyberattack. In addition to legal costs, typical cyber liability insurance usually covers,

Data Recovery Costs
Investigation of the Attack
Business Interruption Costs
Extortion Costs
Penalties and Fines Issued Because of the Breach
Cost of Public Relations and Crisis Management

You should also be aware of what is typically not covered in a cyber liability policy.

Replacing Damaged Equipment
Losses Caused by Related Power Outages
Damage to Property
Any Intentional Act to Harm the Computer System

Understanding Your Risks

Cyber attacks and their aftermath will look different based on your industry. The following explains scenarios and aftermath based on the type of business you own.

The Construction Industry

Risk of Business Interruption- Moderately High Risk
Risk of Privacy Breaches- Moderately Low Risk
Risk of Criminal Activity- High Risk

Examples of risk in the Construction & Building Industry

One of your suppliers’ systems is taken for ransom or otherwise damaged. This results in delays and work stoppages for you due to a lack of materials.
You receive authentic-looking invoices from a company you do business with and pay it. Later, you learn it was a fake invoice, and you cannot get your money refunded.

CyberCare

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Cyber Liability Insurance

Cyber Liability Insurance is designed to help protect you from claims and support your profitability in the event of a cyber breach or attack.

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One of your suppliers’ systems is taken for ransom or otherwise damaged. This results in delays and work stoppages for you due to a lack of materials.
You receive authentic-looking invoices from a company you do business with and pay it. Later, you learn it was a fake invoice, and you cannot get your money refunded.

Education

Risk of Business Interruption- Moderately Low
Risk of Privacy Breaches- High Risk
Risk of Criminal Activity- Medium Risk

Examples of risk in Education

Compromised employee emails open the door to fraudulent activities
Cybercriminals access student and staff files leading to the distribution of personal information on the dark web. Additionally, you could face penalties and must report the breach to all who may be impacted.

Healthcare

Risk of Business Interruption- High Risk
Risk of Privacy Breaches- Moderately High Risk
Risk of Criminal Activity- Medium

Examples of risk in Healthcare

PHI can be stolen, leading to extensive notifications and implementation of plans to correct the problem
Ransomware or malware disrupts the delivery of healthcare

Manufacturing

Risk of Business Interruption- High Risk
Risk of Privacy Breaches- Moderately Low
Risk of Criminal Activity-High Risk

Examples risk in Manufacturing

Problems caused by hackers slow or stop your production or that of your partners
Hackers intercept payments and other sensitive information between your company and your partners

Professional Service Firms

Risk of Business Interruption- Medium Risk
Risk of Privacy Breaches- Medium Risk
Risk of Criminal Activity- High Risk

Examples of Risk for Professional Services

Hackers can access your email and accounts and then reroute your clients’ payments or create fraudulent invoices

Public Entities

Risk of Business Interruption- High Risk
Risk of Privacy Breaches- Moderately High Risk
Risk of Criminal Activity- Medium Risk

Examples of risk for Public Entities

Sensitive information taken from your records can be shared or sold on the dark web
Ransomware can stop public services and put the public at risk

Retail

Risk of Business Interruption-Moderately High Risk
Risk of Privacy Breaches- High Risk
Risk of Criminal Activity- High Risk

Examples of risk for Retail

A cyber attack causes you to lose money because customers cannot buy from you and, in some cases, lose faith in your ability to protect their essential information
Your customers’ personal information is taken in a data breach. You must pay to notify customers, and you may face regulatory fines. Additionally, your reputation takes a very public hit.

Technology

Risk of Business Interruption- Medium Risk
Risk of Privacy Breaches- Moderately High Risk
Risk of Criminal Activity- Moderately Low risk

Examples of risk for Technology

Ransomware holds your system hostage, making it impossible to complete your duties
When the information about your clients is taken, you are liable, and their personal information is up for grabs on the dark web.

Transport and Logistics

Risk of Business Interruption- A High Risk
Risk of Privacy Breaches- Moderately Low Risk
Risk of Criminal Activity- Medium Risk

Examples or risk in Transport and Logistics

Hackers access personal information and use it maliciously or to reroute payments to your company
Your tracking systems are held ransom, causing lost items and extensive delays

If you are not convinced, cybercrime is a significant risk for your company. Look over these statistics.

Half of all small and medium-sized businesses (SMEs) reported a cyberattack within the last year
SMEs pay $2.2 million a year because of cybercrime
Over 43 per cent of cyberattacks target small businesses
60 per cent of SMEs that experience a cyberattack go out of business within six months
Two out of every three SMEs experienced a ransomware attack in the past 18 months. Around 20 per cent of these businesses spent $250,000 to recover from the attacks

While taking steps to prevent becoming a victim of cybercrime is always advisable, criminals constantly improve their tactics. In a 2021 study of data breaches by Verizon, the time it takes to detect a hacker is woefully slow. A hacker can nab your whole customer database in just a few hours. However, on average, it takes 200 days before the attack is discovered. That is over half a year of unlimited access to sensitive information. As you can see, cyber insurance is the best way to protect yourself and your company from cyberattacks.

You have worked hard to get your business up and running, so do not let hackers tear apart what you built. At Grace Insurance, we offer our clients comprehensive and customizable cyber insurance to help protect what is yours.

Cybercriminals are devoting 100 per cent of their efforts to attacking businesses just like yours. Can you afford to let them get away with it? Reach out to us for information about insurance cover and ways to mitigate risks.

small business cyber insurance

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Frans du Plessis, Grace Insurance, ABN 63 133 156 742, AFSL 233750

This article originally appeared on Grace Insurance and has been published here with permission.