Data breaches are perceived as one of the leading risks to businesses today. In the United States, the average cost of cybercrime was reported to be $27.37 million last year, according to Statista. And it’s not just large organizations being cyber-violated; 55% of small businesses have experienced a data breach and 53% have had multiple breaches, per the Insurance Journal.
Technology has helped businesses become more efficient, but it has also made us much more vulnerable. We are now at-risk for all types of cyber incidents, including data breaches, hacking, ransomware, and cyber-attacks. Cybercrimes can compromise sensitive information and cause massive damage to a business. They can cause a loss of customers, scathing media coverage, plunging revenue, decreased brand loyalty, and a ruined reputation – even significant legal fallout. Ultimately, your business may be liable if cybercrime occurs.
Cyber liability insurance protects companies against numerous risks, including:
- Third-party liability – In the event of a data breach or other cybercrime, businesses may be liable for costs incurred by customers, suppliers and other stakeholders due to the incident.
- System recovery – A cybercrime can cause significant damage to an IT system, which can be extremely expensive to repair or replace. Businesses may not be able to operate after a cybercrime due to system failure and downtime. Unfortunately, this leads to additional financial losses.
- Notification expenses – In most states, companies are legally required to notify customers of any cybersecurity breaches that may involve customer data. This notification process may be time-consuming and costly, especially for large corporations with many customers.
- Regulatory fines – Federal and state regulations require businesses to protect consumer data. If a business fails to meet its required compliance duty and it leads to a data breach, that business may incur huge fines.
- Class action lawsuits – Numerous large-scale data breaches have resulted in class action lawsuits. Credit card companies like Capital One, retailers like Macy’s, hotel brands like Marriott, and more were recently hit with class-action lawsuits on behalf of customers whose data was compromised.
MJ Kelly specializes in cyber liability insurance. We excel at working with our clients to evaluate their specific needs and recommend cyber coverage to protect them.