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SERVCORP BLOG
FINANCIAL PLANNING

Does Your Small Business Need Cyber Insurance?

October 15, 2014 | Jennifer Goodwyn

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Sometimes it's easy for small business owners to feel invisible, especially when compared to the Fortune 500s and mega-corporations of the world. But, when it comes to cyber-crime, your business is just as visible and vulnerable as McDonald's, Starbucks, and Amazon. In fact, nearly 40 percent of all cyber-attacks in 2013 targeted companies with fewer than 250 employees.

Presently, insurance companies are recognizing new threats and offering policies intended to protect digital property. Even if you work in a virtual office and don't have to worry about property insurance, cyber insurance can be crucial – it safeguards against viruses and hacking and, if a breach does occur, the insurance will cover loss of profits due to a system fail caused by any virus or attack.

What Can Cyber Insurance Do For You?

Designed to help your small business deal with the negative ramifications of having a web presence, cyber insurance helps mitigate risk and offers protection. By periodically reviewing your cyber security profile, you'll be notified of potential security breaches before they actually occur. As a small business owner this can be valuable, as you probably don't have the time to run these checks yourself.

If an attack does occur, not only will cyber insurance protect you from loss of profits, but they'll reimburse you for the costs associated with an attack, such as hiring additional staff to recover lost information. Additionally, in the event of litigation or a court case that stems from a cyber-crime, some insurance policies will cover any associated legal fees.

Who Needs Cyber Insurance?

The more business you conduct online, the more likely you are to experience a devastating cyber-attack. If you have any kind of online store, even if it's a supplement to a brick-and-mortar store or chain of stores – or you store any sensitive customer data on a network, you should probably consider some level of cyber protection. Regardless of the size, age, industry, or number of customers your business has, investing in cyber insurance may be crucial. Although cyber insurance can help in the event of an attack, it's important to remember that cyber insurance will not prevent a data breach attack from occurring in the first place.

Where Can You Get Cyber Insurance?

Although cyber insurance was once a niche product, it's increasingly being made available as an add-on to the business policies of big name insurance providers, such as Allstate, Nationwide, and Traveler's.  As the field develops, small business owners will have a greater variety of policies and protections to choose from. By taking a look at your current security procedures and ensuring they're as strong as possible before applying for cyber insurance, you could help lower the costs.

As with any insurance plan, cyber insurance can be customized to meet the needs of your small business. At the minimum you should consider including coverage for the most common cyber risks, such as theft of confidential information, corruption of data, and loss of business income as the result of an attack. To determine the best coverage for you, talk to your insurance agent about cyber insurance, existing policies, risk level, and what cyber insurance can do for you.  

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